House Financial Reform Plans Show Lawmakers Recognize Problems Caused by CFPB

This week, the House Financial Services Committee approved 15 bills on regulatory relief for community financial institutions, investment opportunities, access to financing for home buyers, consumer protection, and a national strategy to combat financial crime. Competitive Enterprise Institute Senior Fellow John Berlau praised the progress on important reform plans this week.

This week’s likely vote on the Home Mortgage Disclosure Adjustment Act (H.R. 2954), as well as today’s markup of several regulatory relief bills in the House Financial Services Committee, are a positive sign lawmakers recognize the enormous burden the CFPB put on small banks and credit unions. These bills also show that members of Congress realize they still must tackle the CFPB’s flawed rulemaking, even with new leadership at the bureau.

H.R. 2954 would exempt banks and credit unions that make less than 500 mortgages per year from the CFPB’s heavy reporting requirements on mortgages that entail 48 unique data fields. This exemption is a good start but should be broadened to give relief to more Main Street banks and credit unions.

In today’s committee markup, the Community Financial Institution Exemption Act (H.R. 1264) would exempt banks and credit unions with less than $50 billion in consolidated assets from all CFPB rules. These institutions would still be regulated by their primary financial regulatory agency.

The Portfolio Lending and Mortgage Access Act (H.R. 2226) would lessen CFPB regulation for banks and credit unions with less than $10 billion in assets that keep the mortgages they make. This would make it easier for smaller financial institutions that hold their mortgages on their own books, known to be among the most cautious of lenders, to compete in the mortgage market and serve ordinary consumers.

The Business of Insurance Regulatory Reform Act of 2017 (H.R. 3746) would prevent duplicative regulation from hitting the nation’s insurance agents and firms by exempting them from CFPB rules if they are regulated by a state agency.

And the Practice of Law Technical Clarification Act of 2017 (H.R. 4550) would pare down the CFPB’s overly broad definition of “debt collector” and clarify that the CFPB has no jurisdiction over attorneys who do not offer consumers financial products.

All these bills take incremental yet important steps to reverse the CFPB’s multiyear regulatory assault on consumers, small entrepreneurs, and the community banks and credit unions that serve them. The Senate needs to follow the House’s lead and pass companion measures.