In advance of a Consumer Financial Protection Bureau (CFPB) oversight hearing later this month, all Financial Services Committee Republicans, led by Patrick McHenry (NC-10), sent a letter to the new Director of the CFPB, Rohit Chopra. The letter outlines Republicans’ concerns with three partisan, anti-consumer actions recently taken by the CFPB, while awaiting a permanent leader, regarding the abusiveness standard, supervisory process, and Military Lending Act authority. The letter also asks Director Chopra to detail his priorities for the CFPB.

Read excerpts from the letter:

The Republican Members write “Earlier this year, we wrote to former Acting Director Uejio regarding several actions he undertook while at the Consumer Financial Protection Bureau (Bureau). Over his nine-month tenure, Acting Director Uejio delayed the implementation date of multiple major rulemakings conducted in accordance with the Administrative Procedures Act (APA) typically taken under a Senate-confirmed Director; reversed and rescinded policy statements and guidance issued by a Senate-confirmed Director; and undertook 14 enforcement actions against financial services companies. Acting Director Uejio’s response was less than satisfactory. It failed to articulate with any type of specificity substantive problems with the previous rulemakings, policy statements, and guidance. As you begin your tenure, we would appreciate a more fulsome response to the concerns outlined below.”

“In March, the Bureau rescinded a January 2020 policy statement that provided clarity on the application of the ‘abusiveness’ standard in supervision and enforcement matters. The 2020 policy statement provided transparency with respect to the Bureau’s strategy for enforcing alleged wrongdoing under the ‘abusive’ component in UDAAP. This is particularly important in situations where there is overlap with allegations that a practice is ‘unfair” or ‘deceptive.’ Federal courts have established precedent to determine whether a practice is ‘unfair or deceptive.’ The 2020 statement provided further clarity for financial institutions regarding when the ‘abusiveness’ standard would apply. This certainty encouraged financial institutions to offer permissible, innovative products and services.”

“In March, the Bureau rescinded a 2018 bulletin outlining the Bureau’s approach to supervisory communications. The 2018 bulletin was replaced with a new bulletin that upholds the Bureau’s use of Matters Requiring Attention (MRA) but eliminates the Supervisory Recommendation (SR). The SR is a tool that had been used by the Bureau to communicate and recommend action absent a violation of federal consumer financial law. While MRAs are not legally binding, an MRA can impact a financial institution’s compliance rating.”

“In June, the Bureau issued an Interpretive Rule indicating the Bureau will resume supervising financial institutions for compliance with the Military Lending Act (MLA). In making this decision, the Bureau opined that it is ‘no longer persuaded by counterarguments that it does not have the relevant authority.’ To be clear, Congress has never explicitly granted the Bureau this authority. In fact, in 2019, former Director Kraninger ‘asked Congress to explicitly grant the Bureau authority to conduct examinations specifically intended to review compliance with the MLA.’”

“In addition to responses on the matters above, I would appreciate a list of your priorities that we can expect during your tenure. Acting Director Uejio’s tenure was blatantly political and grounded in the strategy of ‘regulation by enforcement.’ This also describes the tenure of former Director Cordray as he ran roughshod over businesses of all sizes. I have reason to believe your tenure will be no different. Several statements you made during your confirmation hearing are concerning. I caution you against initiatives that exceed your statutory authority, undermine the credit markets, and have the effect of raising the cost of credit for all Americans.”

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