Congress needs to take steps to improve the accountability of the new Consumer Financial Protection Bureau (CFPB), the American Bankers Association (ABA) said in a statement today.
"My bank’s philosophy – shared by banks everywhere – has always been to treat or customers right and do whatever we can to make sure that they understand the terms of the loans they are taking on and their obligations to us," Leslie Andersen, president and CEO of Bank of Bennington in Bennington, Neb., testified on behalf of the ABA before the House Financial Services Committee.
The ABA believes that in creating the CFPB, the Dodd-Frank Act "divided consumer protection from safety and soundness supervision and fragmented authority for enforcement of consumer protection laws." Improvements are therefore necessary to ensure that the CFPB is accountable to the fundamentals of safe and sound operation, to the gaps in regulatory oversight of non-banks, and to the principle of consistent regulation, according to a statement.
Suggested improvements include structural changes such as replacing the director with a commission and changing the voting standard for review of CFPB rules from two-thirds to a simple majority vote.
"A commission structure would broaden the perspective on any rulemaking and enforcement activity of the bureau, and would provide needed balance and appropriate checks in the exercise of the bureau’s authority," Andersen said.
With regard to regulatory gaps, relevant provisions of Dodd-Frank can be used to require CFPB demonstrate the amount of expenditures that are being devoted to non-bank regulation and supervision, Anderson testified. She added that Dodd-Frank Act giving state attorneys general and prudential regulators additional authority to act on their own initiative to enforce CFPB rules would result in "countless competing interpretations of the law and will result in complicating and conflicting standards."
"When developing and offering products, firms rely on the basic rules of the road, knowing they are subject to careful changes from time-to-time," Anderson said. "The premise of the Bureau of Consumer Financial Protection was that it would result in a single set of rules of the road for consumers, industry and investors to abide by for the benefit of all. If we are to hold the bureau accountable to this premise, we must hold accountable all those who derive authority from its existence to abide by the same rules of the road."
