H.R. 3193: Consumer Financial Freedom and Washington Accountability Act

H.R. 3193

Consumer Financial Freedom and Washington Accountability Act

Sponsor
Rep. Sean Duffy

Date
February 27, 2014 (113th Congress, 2nd Session)

Staff Contact
Communications

Floor Situation

On Thursday, February 27, 2014, the House will consider H.R. 3193, the Consumer Financial Freedom and Washington Accountability Act, under a rule.  H.R. 3193 was introduced on September 26, 2013 by Representative Sean Duffy (R-WI). It combines the text of five bills reported out of the Committee on Financial Services, including H.R. 2385, H.R. 2446, H.R. 2571, H.R. 3193, and H.R. 3519.

Bill Summary

H.R. 3193 makes necessary reforms to an unaccountable Consumer Financial Protection Bureau (CFPB). Specifically, the bill replaces the existing director who has sole responsibility for carrying out the CFPB’s mission with a Commission comprised of the Fed’s Vice Chair for Supervision and four members appointed by the President, with the advice and consent of the Senate.[1]  

The bill eliminates the CFPB’s current exemption from the budgetary process and subjects the CFPB to the regular authorization and appropriations process.[2]  It also reins in CFPB salaries by requiring the CFPB to pay its employees according to the GS pay scale like other federal agencies.   

H.R. 3193 lowers the current CFPB vote threshold for setting aside CFPB regulations “from two thirds of the FSOC voting membership to a simple majority, excluding the Director of the CFPB.” “It modifies the standard for FSOC’s review to permit a CFPB regulation to be set aside if it ‘inconsistent with the safe and sound operations of U.S. financial institutions’” and “amends the time limit for the FSOC to review and vote on CFPB regulations.” H.R. 3193 specifies “that in prescribing a rule, the CFPB must consider the ‘impact of such rule on the financial safety or soundness of an insured depository institution.’”[3]

Finally, the bill “prohibits the CFPB from requesting, accessing, collecting, using, retaining, or disclosing nonpublic personal information about a consumer unless: (i) the CFPB clearly and conspicuously discloses to the consumer, in writing or in an electronic form, what information will be requested, obtained, accessed, collected, used, retained, or disclosed; and (ii) the consumer informs the CFPB, before such information is requested, obtained, accessed, collected, used, retained, or disclosed, that such information may be requested, obtained, accessed, collected, used, retained, or disclosed.”[4]  The bill subjects contractors to the same requirements and claries that the “Right to Financial Privacy Act of 1978 applies to the examination … or disclosure to the CFPB of financial records or information in the exercise of its authority with respect to a financial institution.”[5]

Background

In 2010, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd Frank).[1]  Title X of Dodd Frank establishes the CFPB within the Federal Reserve System and gives it rulemaking, enforcement, and supervisory powers over most consumer financial products and the “entities that sell them.”[2]  According to CRS, title X “consolidates in the CFPB federal consumer protection powers that previously were held by seven other regulators.”[3]  Moreover, CRS expresses that “there is a great deal of uncertainty in how the new agency will exercise these broad and flexible authorities, especially in light of its almost exclusive focus on consumer protection and the novel expansion of federal oversight to non-depository financial institutions.”[4]

The CFPB is by “design insulated from normal checks and balances.”[5] It has “unfettered control over consumer products ranging from checking accounts and credit cards to auto loans and home mortgages.”[6] The CFPB is led by a single director who is vested with complete authority and is funded whenever needed through the Federal Reserve and not the normal appropriations process. CFPB regulations are not subjected to scrutiny and can only be set aside with a supermajority of the Federal Stability Oversight Council (FSOC) when it determines that “the regulation poses a risk to the entire U.S. financial system.”[7]



[1] See P.L. 111-203

[3] See id

[4] See id

[5] See Committee on Financial Services document titled H.R. 3193, the Consumer Financial Freedom and Washington Accountability Act

[6] See id

[7] See id

Cost

According to CBO, enactment of H.R. 3193 would decrease direct spending by $6 billion over a ten year period.[1]



[1] See id

Amendments

1)         Rep. Rigell (R-VA) Amendment #2 Amendment requires the Consumer Financial Protection Bureau to: 1) submit an analysis on the impact of its proposed rule or regulation on the financial industry, regardless of the size of the impacted entity; and 2) submit an analysis of consumer and small business access to credit as a result of the regulation, to the Financial Stability Oversight Council for the purposes of public review.

2)         Reps. Stivers (R-OH) and Walz (D-MN) Amendment #6 Amendment creates an independent, Senate-confirmed Inspector General for the Financial Product Safety Commission.

3)         Rep. DeSantis (R-FL) Amendment #4Amendment repeals the exclusive rulemaking authority of the Consumer Financial Protection Bureau.

4)         Rep. Moore (D-WI) Amendment #7  Amendment adds Findings and Sense of Congress language to the end of the bill that acknowledges and honors the work of the Consumer Financial Protection Bureau in providing protection and relief to consumers from instances of unfair, deceptive, and abusive practices in financial markets. 

Additional Information

For questions or further information contact the GOP Conference at 5-5107.