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The Senate Banking Committee held a hearing today entitled: Assessing the Effects of Consumer Finance Regulations. Our letter to the committee on this hearing included the executive summary of our recently released regulatory burden study, which was entered into the Congressional Record.
The Committee heard testimony from four witnesses: Leonard Chanin, a former Federal Reserve and CFPB staffer; Doug Hirschmann of the US Chamber of Commerce Center on Capital Markets Competitiveness; Professor Todd Zywicki of the George Mason Antonin Scalia School of Law; and the Reverend Willie Gable Jr of the National Baptist Convention.
Mr. Chanin, author of CUNA’s legal opinion memo on CFPB’s statutory exemption authority, expressed shortcomings with the CFPB, and stated that there is clear evidence that regulatory complexity has reduced options for consumers. He also noted the CFPB’s propensity to use enforcement actions and orders to create policy, thereby circumventing the ordinary rulemaking process. During questioning, Senator Dean Heller (R-NV) asked Mr. Chanin whether under Dodd-Frank the CFPB has the authority to exempt community lenders including credit unions. Mr. Chanin responded that the CFPB has a “great many authorities” under the law to exempt small institutions from some or all requirements.
David Hirschmann focused his testimony primarily on arbitration issues, arguing that arbitration is cheaper and more efficient than litigation for consumers seeking redress. He also expressed the Chamber’s disagreement with CFPB’s application of disparate impact theory in its auto lending enforcement cases.
Todd Zywycki, who was a featured panelist at CUNA’s 2016 Governmental Affairs Conference (GAC), noted that he initially supported the creation of the CFPB when Dodd-Frank was being written, but feels now the bureau has "squandered [an] unprecedented opportunity to modernize the consumer credit system," and says the CFPB has cut off access to bank accounts and other products, while driving vulnerable consumers into the arms of bad actors.
Zywycki also lamented the decline in availability of free checking accounts, which he called "one of the most important pro-consumer innovations in the history of retail consumer financial services." He attributed this decline to increased compliance costs under Dodd-Frank, but noted that many credit unions do still offer them.
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