Senate Banking Committee Reviews Recent CFPB Activity (with Delta Strategy Group Summary)
The Senate Banking Committee discussed the effects of actions by the Consumer Financial Protection Bureau ("CFPB") in enforcement, fair lending, arbitration clauses, payday loans and exemptions with a private-sector consumer finance panel. In a separate executive session, the Senate Banking Committee postponed SEC nominations and conducted an open session to question CFPB Director Richard Cordray about the CFPB's Semi-Annual Report to Congress.
According to a hearing summary prepared by the Delta Strategy Group, the majority of the private-sector participants asserted that the CFPB's use of enforcement actions to shape policy will create overall uncertainty, diminish financial innovation and lead to inconsistencies in the marketplace. The following witnesses testified:
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Mr. Leonard Chanin (Of Counsel, Morrison and Foerster LLP);
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Mr. David Hirschmann (President and CEO, U.S. Chamber of Commerce Center for Capital Markets Competitiveness)
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Mr. Todd Zywicki (Foundation Professor of Law and Executive Director of the Law and Economics Center, George Mason University School of Law); and
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Reverend Willie Gable Jr. (Doctor of Ministry and Chairman of the Board, National Baptist Convention USA, Housing and Economic Development Commission).
At the executive session, the Senate Banking Committee postponed voting on SEC commissioner nominations due to concerns raised by Democratic Senators Charles Schumer (D-NY), Robert Menendez (D-NJ), Jeff Merkley (D-OR) and Elizabeth Warren (D-MA) regarding the nominees' stance on the corporate political spending disclosure rule.
The executive session preceded an open session that consisted of a hearing on the CFPB Semi-Annual Report to Congress with CFPB Director Richard Cordray as its sole witness. In his testimony, Mr. Cordray outlined developments in CFPB consumer engagement. Although the CFPB created a team to engage with the FinTECH community, it is not appropriate for FinTECH companies to gain advantages in the marketplace by arbitraging the regulatory system, he asserted. Mr. Cordray also indicated that the CFPB will issue a proposed rulemaking on arbitration clauses later in 2016.