On May 21, ALTA President Rob Chapman testified at the hearing titled “Legislative Proposals to Improve Transparency and Accountability at the Consumer Financial Protection Bureau (CFPB).” The hearing was held before the House Financial Services subcommittee on Financial Institutions and Consumer Credit.
The hearing focused on legislative ideas to improve how the CFPB regulates providers of financial services. One such proposal is H.R. 4383, which would create a small business advisory board at the CFPB. ALTA members asked members of Congress to co-sponsor the bill during the Federal Conference & Lobby Day earlier this month.
“When the Bureau operates in a transparent, open, and iterative manner, the results are generally positive,” Rob told the subcommittee. “However, when the Bureau makes unilateral decisions, rolls out initiatives, rules or processes in a more closed deliberation, the results are far more likely to be problematic.”
Rob represented the industry well, walking the committee through our interactions with the Bureau and how more transparent processes led to better outcomes for both our industry and consumers. Specifically, Rob focused on the uncertainty caused by the April 2012 service provider bulletin saying that the lack of outreach left many companies “shooting in the dark as they attempt to invest in systems and processes to protect consumers.” He continued: “Many of our members see different requirements, vetting procedures and are concerned that they will no longer be allowed to compete for business when a mortgage is financed by certain lenders.”
In contrast, “had the Bureau consulted with mortgage originators and the real estate settlement industry, we would all have a better understanding of what is expected from the person conducting the settlement of real estate transactions, and the response to the CFPB bulletin would be less disruptive, more consistent and efficient,” Rob told the committee.
The hearing also allowed us to encourage Congress to pass H.R. 4383, bipartisan legislation sponsored by Rep. Robert Pittenger (R-NC) and Rep. Denny Heck (D-WA) that would create a small business advisory panel at the CFPB. When asked by Rep. Pittenger if ALTA had a good relationship with the CFPB, Chapman said yes, but that it could be “better with the creation of a small business panel.” During one part of the hearing, Rep. Carolyn Maloney (D-NY) showed her support for the bill saying “everyone should have an advisory committee.”
Rob also encouraged the subcommittee to authorize the CFPB to issue advisory opinions. “The Bureau takes its enforcement role seriously and should take its ability to promote good practices just as seriously,” he said. “An advisory opinion provides certainty to those of us who comply with federal consumer financial law in real-life situations. Consumers will see better outcomes if the Bureau spends more time advising people in the industry how to best follow the law.” Finally, Rob suggested that the CFPB encourage public feedback on policy statements, bulletins and other guidance documents. He said public comments ensure documents are useful and understandable to industry and provide a safety valve to reduce unintended consequences.
Please join me in congratulating Rob on a job well done by tweeting to @titlerob. If you have any questions please contact please contact ALTA’s vice president of government and regulatory affairs, Justin Ailes, at email@example.com or 202-261-2937.