Statement of Administration Policy: H.R. 3193 - Consumer Financial Freedom and Washington Accountability Act

(House Rules)

(Rep. Duffy, R-Wisconsin)

The Administration strongly opposes House passage of the House Rules Committee Print of H.R. 3193 because it would undermine critical Wall Street reforms and weaken important consumer protections, potentially exposing the Nation's economy to systemic risks similar to those that led to the 2008 financial crisis.

The financial crisis demonstrated that one of the most glaring gaps in the Nation's regulatory framework was the absence of an agency to protect consumers purchasing financial products and services. The lack of such an agency not only left consumers unprotected but also enabled the origination of unduly risky mortgage loans, contributing directly to the crisis. The Dodd-Frank Wall Street Reform and Consumer Protection Act addressed this gap through the creation of the Consumer Financial Protection Bureau (CFPB), the first ever independent consumer watchdog with the sole task of protecting families making financial decisions. Since its creation, the CFPB has put in place safer national mortgage standards to protect borrowers, begun to implement protections governing non-mortgage products, improved disclosure requirements so that consumers are better informed, created a national consumer complaint center that has handled nearly 270,000 consumer complaints to date, secured more than $3 billion in relief for nearly 10 million consumers through enforcement actions against bad actors who violated the law, and established Federal oversight of important financial industries for the first time, including nonbank mortgage lenders, payday lenders, debt collectors, and credit reporting agencies. All of this activity better protects consumers while also strengthening the stability of the financial system by safeguarding against the distribution of unduly risky consumer financial products.

H.R. 3193 would seriously weaken the decision-making power of the CFPB by replacing the agency and its Director with a five-member Financial Product Safety Commission (FPSC). This organizational structure would significantly limit the agency's ability to respond effectively to the rapid changes in the dynamic consumer financial products and services market.

In addition, H.R. 3193 would compromise the independence of the agency by imposing unwarranted restrictions on a regulatory process that is already subject to significant oversight. The CFPB is the only banking regulator whose rules can be set aside by a council made up primarily of other Federal agencies. H.R. 3193 would go beyond this already stringent limitation by making it easier for the Financial Stability Oversight Council to set aside FPSC rules and regulations, which could significantly impede the agency's ability to protect American consumers from unfair, deceptive, and abusive practices.

Moreover, H.R. 3193 would subject the agency's funding to appropriations, dramatically undermining its ability to carry out consumer protections independent of political pressures. The change in appropriations contemplated by H.R. 3193 also is inconsistent with how bank regulation works. The CFPB – like the OCC, the FDIC, and other bank regulators – is funded outside of the appropriations process and not from taxpayer funds as this bill would direct. Funding for Federal bank regulators has long been independent from the appropriations process so that political agendas would not interfere with financial supervision. H.R. 3193 would create a regulator for consumers that would be less independent and more subject to political interference than other bank regulators. In addition, the bill's funding authorization level, representing a more than 50 percent cut from the current CFPB authorization for this year, would severely harm the agency's ability to provide consumer protection in the financial services marketplace.

This legislation would significantly interfere with the CFPB's charge to make consumer financial markets operate more efficiently and effectively, facilitate innovation in the marketplace, protect consumers' interests, and ensure that consumers have the information they need to make prudent financial decisions.

The President's senior advisors would recommend that the President veto any bill, including H.R. 3193, that makes the Nation's economy more vulnerable to another devastating financial crisis by undermining the core reforms included in Wall Street Reform.