Contentious Provision in Consumer Protection Bill

In cases where consumers are unfairly targeted or harassed by collection agencies, where can they turn for help with issues related to the Fair Debt Collection Practices Act (FDCPA)? What happens when your personal and financial information is held by a company that gets hacked? The U.S. Consumer Financial Protection Bureau (CFPB) was created, in part, to ensure that consumers are treated fairly by creditors and other debt collectors. However, funding to the CFPB looks to be at risk, according to a recent article in Reuters.
Provision Seeks to Cap CFPB’s Funding Between 2020 and 2025
Newly proposed legislation related to the CFPB was designed to “establish special advisory groups,” or “outside committees to advise it on actions related to community banks and credit unions.” Under the new legislation, these kinds of groups would be “mandatory” and would require a “panel made up of small business leaders” to assist in consumer protection measures. However, President Obama has indicated that he will veto the bill if it remains in its current form. Why? According to the article, a Republican-backed provision added to the bill only recently aims to cut the budget of the CFPB over the next decade. And if that provision remains, the White House has underlined that Obama will veto the bill.
A statement from the White House emphasized that “these reductions to the caps could result in, among other things, undermining critical protections for families from abusive and predatory financial products.” Keep in mind that the bill needs to pass both the House and the Senate before reaching the President. Without the contentious provision, it has been described as a bi-partisan bill.
Why do Republicans want to cap the budget for the CFPB? In short, those in favor of the provision argue that the CFPB isn’t currently as accountable as it should be to congressional oversight, and as such its budget needs to be placed under greater scrutiny. And the proposed cap in the new bill is intended to prevent additional government spending. According to Jeff Emerson, a spokesperson for the House Financial Services Committee (which is currently a Republican-led committee), “the bill would reduce the maximum amount the agency could draw from the Fed,” which should be unproblematic since “the bureau is not projected to actually spend that much.”
Powers and Limitations of the Consumer Financial Protection Bureau
Congress created the CFPB back in 2010, and it currently receives its funding from the Federal Reserve. This is a different funding path than other agencies that get their funding through the appropriations process, the Reuters article explains. But if the CFPB isn’t sufficiently funded (and if its budget gets capped), can it really do its job properly as a consumer watchdog? While the other elements in the bill may be helpful for consumers, the likelihood that it will be vetoed may be good news for consumers.
News of the budget provision added to the recent bill comes shortly after the House of Representatives voted back in February to pass a bill that limited the CFPB’s funding in 2016. With the Republican-controlled House, consumers across the country have seen numerous efforts to limit the power of the CFPB. As a Reuters report explained, “Republicans have criticized rules . . . from the 2010 Dodd-Frank financial law aimed at Wall Street,” from which the CFPB arose, “which they say impose unfair costs on businesses and hurt economic growth.”
If you have questions about your rights as a consumer, or if you have been the victim of unfair debt collection practices, you should speak with an Oak Park consumer protection attorney as soon as possible.
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