Congress should enact legislation to better define “unfair, deceptive, or abusive acts or practices” to avoid abuses by future regulators, and to fund the Consumer Financial Protection Bureau through congressional appropriation to make it more responsive to elected officials, CFPB Acting Director Russell Vought told House lawmakers today. He also said the bureau is close to proposing a new open banking rule.
Vought, who is also director of the Office of Management and Budget, appeared before the House Financial Services Committee for an often contentious hearing about the CFPB during his tenure. Republican committee members and Vought painted the CFPB as an often abusive, unaccountable agency that has cost consumers billions of dollars. Democrats alleged Vought had broken the law in his effort to defund and potentially eliminate the bureau, and that the agency has actually saved Americans billions.
CFPB reforms
Asked about what Congress could do to reform the CFPB, Vought said the current administration has concerns about the definition of abusiveness under UDAAP, and lawmakers may want to codify a better definition. The American Bankers Association and other parties sued the CFPB under the previous administration for changes to the UDAAP exam manual, arguing the agency had unlawfully expanded the statutory definition of “unfairness” to encompass discrimination. The CFPB last year agreed to drop its appeal of a federal court decision finding the changes unlawful.
Still, the most positive change would be to subject the bureau to congressional appropriation, Vought said. CFPB is currently unique among federal agencies in that its funding comes from the Federal Reserve.
“The degree to which (the CFPB) doesn’t have to come to Congress and have its budget approved, and dispensed to, is a massive, massive problem,” Vought said. “I think it’s the number one thing that I would point the committee to.”
Open banking
The CFPB has also been embroiled in legal fights over its implementation of Section 1033 of the Dodd-Frank Act, the “open banking” rule that requires banks and other financial institutions to make a consumer’s financial information available to them or a third party at the consumer’s direction.
Vought said the CFPB is “very close” to having a proposed rule to replace its previous 1033 rule. However, he noted that President Trump has nominated former CFPB Deputy Director Brian Johnson to serve as full-time director of the bureau. The agency is timing the release of the proposal with possible Senate confirmation of Johnson, he said.
“We are supportive of open banking as a concept, and we’re working hard on it,” Vought said.
