House Republicans target the CFPB as the agency takes aim at 'junk fees'

WASHINGTON — Lawmakers discussed ways to reform, oregon altogether defund, the nation's foremost user extortion bureau connected Thursday, arsenic the regulator takes purpose astatine amerciable "junk fees" levied connected consumers.

A subcommittee of the House Financial Services Committee is considering astir 10 legislative proposals to alteration the astir 13-year-old Consumer Financial Protection Bureau, arsenic Republicans and critics extracurricular the Capitol impeach the bureau of overreach, insufficient rulemaking and a deficiency of accountability. Members heard grounds from respective witnesses who defended oregon condemned the agency's practices.

"The bureau is led by a single, partisan director, Rohit Chopra, who has routinely acted unilaterally and arbitrarily, often extracurricular immoderate statutory mandate, without engaging rulemaking successful compliance with the Administrative Procedures Act, and adjacent sometimes without adjudication," Rep. Andy Barr, a Kentucky Republican and president of the Subcommittee connected Financial Institutions and Monetary Policy, said successful opening remarks. "This has led to the CFPB becoming the astir unchecked, unaccountable bureau successful the full Federal government." 

GOP lawmakers successful the hearing criticized the Biden administration's propulsion to eradicate "junk fees," mostly regulated by the CFPB. The fees picture surcharges that companies levy for user goods and services.

On Wednesday, the bureau released a list of amerciable junk fees encompassing deposit accounts; car and owe indebtedness servicing; and payday and rubric lending.

Subcommittee subordinate Blaine Luetkemeyer, R-Mo., said Chopra has utilized junk fees arsenic an excuse to grow his authority.

"So, the information that we present telephone them junk fees doesn't mean it's real," Luetkemeyer said aft witnesser Jessica L. Thompson, an lawyer astatine the conservative-leaning Pacific Legal Foundation, agreed that the word does not beryllium arsenic successful the fiscal lexicon.

"Because determination is nary specified connection retired there. There is nary authority. So, I deliberation we arsenic a radical request to beryllium pushing back," helium said.

The murky explanation for junk fees leaves fiscal institutions "with nary roadmap arsenic to however to travel that," said William Himpler, president and CEO of the American Financial Services Association, a commercialized radical for user recognition companies.

Another witnesser accused the CFPB of making arbitrary decisions astir what qualifies arsenic a junk fee. The CFPB's moving explanation of junk fees is "any interest they don't like," argued Devin Watkins, an lawyer astatine the conservative-leaning Competitive Enterprise Institute.

"When the explanation nether however they're acting is truthful wide similar that, it raises existent non-delegation concerns that could undermine their authorization to enact any of these," Watkins said.

At slightest 1 witnesser defended the CFPB's authorization to combat excessive surcharges. Keith Ellison, Minnesota's Democratic lawyer wide and a erstwhile subordinate of the House Financial Services Committee, has defended the agency's oversight of predatory lending services and fraudulent actors. He has said the bureau tin modulate hidden surcharges consumers bash not cognize about.

"Maybe definite firms don't cognize what junk fees are but consumers know," said Ellison, who served successful Congress erstwhile was the CFPB was created. "(Companies) don't disclose (the fees). They didn't archer you astir it. They didn't cognize you had a crushed to expect it. It's a interest that they tack connected due to the fact that they person the marketplace powerfulness to enforce that fee."

"It is perfectly due for the CFPB to modulate this," Ellison said. "I tin archer you, attorneys general, some Democrat and Republican, bash it each day. And it is portion of the mode that we make confidence, religion and make the quality for consumers to person a changeable astatine prosperity."

The CFPB was created from the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into instrumentality by erstwhile President Barack Obama successful 2010. The instrumentality wholly overhauled the fiscal regulatory strategy aft the 2008 Great Recession.

In 2021, President Joe Biden chose Chopra to service arsenic the bureau's director. Chopra was antecedently appointed to service connected the Federal Trade Commission by erstwhile President Donald Trump.

Republican lawmakers person criticized the agency's backing mechanism, which bypasses the yearly appropriations process, and the deficiency of an enforcement committee oregon autarkic inspection mechanism. Proposed authorities the subcommittee is acceptable to see includes oversight of existing guidance, rules and regulations; changing the CFPB's backing root to guarantee Congress has to o.k. it; constitution of an Office of Inspector General for the CFPB; and a request for the bureau to monetarily reward whistleblowers.

But immoderate Democrats person argued Republicans person wanted to combat the CFPB's oversight of banks and different fiscal institutions since the bureau was formed.

"Many successful the Republican Party person fought against the CFPB since its inception, repeatedly seeking ways to delegitimize, defund, oregon astir recently, to abolish the bureau entirely," said Rep. Barry Loudermilk, D-Ga., the subcommittee vice chairman.

Other Democratic lawmakers pushed backmost against their GOP counterparts connected Thursday with a biting connection released during the hearing.

"Make nary mistake. This is astir whose broadside you're on: workers and consumers oregon large corporations and Wall Street," said Democratic Rep. Maxine Waters, ranking subordinate of House Financial Services Committee and Democratic Sen. Sherrod Brown, seat of the Senate Committee connected Banking, Housing, and Urban Affairs. Waters besides questioned Ellison during the subcommittee hearing.

"This is not betterment for the payment of consumers, it is different leafage pulled from the aforesaid Republican playbook designed to destruct the CFPB and its enactment to empower consumers. The CFPB has made large advancement successful supporting consumers, combatting favoritism and junk fees, holding ample fiscal institutions accountable for repeatedly harming consumers, and truthful overmuch more," the lawmakers said.

"As Chair of the Senate Banking and Housing Committee and Ranking Member of the House Financial Services Committee, we volition proceed to enactment with our colleagues to halt immoderate anti-consumer measure and support the CFPB truthful that consumers tin proceed to person an bureau solely dedicated to protecting their hard-earned money," the lawmakers added.