‘Clear Rules of the Road’ Needed, Trades Ask Biden for Help With CFPB

Nine financial trade groups, including NAFCU and CUNA, co-authored a letter to President Joe Biden asking for his “support in our quest for clear rules of the road in the financial services industry that take into account both the benefits and costs of regulations.”

Monday’s three-page letter focused on the group’s collective frustration at the CFPB and the chaotic regulatory world the Bureau has created for financial organizations.

“Markets work best when the rules are clear, so it is possible to comply with them,” the groups wrote. “Blog posts that contradict law or regulation, vague guidance that deems common practices like using form contracts or including certain terms and conditions in contracts as alleged violations of law, proclamations of the CFPB’s novel interpretation of law via amicus briefs, or enforcement actions that contradict state law, are not setting clear expectations that it is possible to follow.”

The letter continued, “Moreover, in some instances, guidance has imposed new substantive obligations on affected parties without going through the notice-and-comment process; in these instances, such guidance is not truly ‘guidance,’ but instead operates as a substantive rule.”

The letter to President Biden came on the heels of Friday’s vote by the House of Representatives to halt the implementation of the CFPB’s section 1071 rule. The Senate similarly passed a resolution in October to stop the rule. The rule, which was finalized in March, would require credit unions to collect data on applications for credit for minority-owned, women-owned and small businesses. Credit union trade groups have been against any such rule.

Part of the argument to stop the rule, among several other proposed rules coming from the CFPB this year, has been the non-traditional ways the CFPB has tried to implement new regulations. The nine organizations writing President Biden want these inconsistent rulemaking processes to stop.

“Instead, we implore you to emphasize the need for rulemaking within your administration,” the groups wrote. “Rulemaking includes an opportunity for notice and comment, giving stakeholders the chance to ask questions, review (and replicate) the underlying data and analysis in support of a proposed rule, point out potential inconsistences with different laws, and outline potential impacts on consumers and businesses. The CFPB continues to creatively avoid following the notice and comment rulemaking process as required under the Administrative Procedure Act.”

The letter continued, “CFPB has failed to account for the cumulative impact of its numerous rulemakings, guidance documents, and informal proclamations via blog post or speech on banks and lending. Ultimately, these costs will be passed on to American consumers. This is contrary to the administration’s goal of reducing fees for American consumers.”

The White House has not responded to claims made in the letter.