This week, Rohit Chopra, Director of the Consumer Financial Protection Bureau (CFPB), appeared before both the Senate Banking and the House Financial Services Committees to deliver the CFPB’s semi-annual report to Congress. In the hearings Director Chopra was questioned on a number of actions that the CFPB has taken under his leadership.

The “Junk Fee” Initiative and Credit Card Late Fees

Several members of Congress pressed the Director on the CFPB’s action on credit card late fees. Senate Banking Committee Ranking Member Tim Scott (R-SC) said in his opening statement that, “Director Chopra has continued his public-pressure campaign, mislabeling legitimate payment incentives as ‘junk fees’ or ‘illegal fees.’ This sweeping initiative lumps legitimate, standard credit card late fees in with the White House’s political efforts to bring down fees in other sectors.” In the House hearing, Rep. Barry Loudermilk (R-GA) questioned Director Chopra on t how the lowering of late fees would create consequences for consumers who pay their credit cards on time. AFSA recently commented on the proposal.

Credit Repair Scams

Numerous members were raised concerns about questionable credit repair scams. Senate Banking Chairman Sherrod Brown (D-OH) asked Director Chopra, “What’s the CFPB doing to protect consumers from some of these shady credit repair outfits that charge consumers big bucks but fail to deliver lasting results?” Watch the clip here.

During the House Financial Services Committee hearing, Rep. Emanuel Cleaver (D-MO) condemned credit repair organizations for targeting Americans trying to get their lives back on track and highlighted the need for Congress to act. Director Chopra responded that the CFPB welcomes any ideas Congress might have to limit these scams and complimented the financial-services industry for raising awareness about these entities. Watch the clip here.

Additionally, Rep. Brad Sherman (D-CA) asked Director Chopra what the CFPB is doing to help consumers avoid credit repair scams. Director Chopra responded that while they have brought enforcement actions, they do not want to play “whack-a-mole.” Watch the clip here.

Earlier this year AFSA and other financial-services industry groups signed a joint trade letter urging the Senate Banking and House Financial Services Committees to introduce legislation to modernize the Credit Repair Organizations Act and limit the threat credit repair scams pose to consumers and credit markets.

Regulation by Press Release

In the House Financial Services hearing, Rep. Blaine Luetkemeyer (R-MO) questioned the CFPB’s reliance on press releases and guidance. Director Chopra responded that public statements, bulletins, and guidance are not legally binding. Rep. Mike Lawler’s (R-NY) questioning led Director Chopra through the Administrative Procedures Act, which explicitly states that blog posts do not have the weight of law behind them. AFSA has previously emphasized that press releases are not policymaking, even highlighting a press release from the CFPB that included recommendations which overshot statutory requirements.

1071

Section 1071 of the Dodd-Frank Act was also of interest at the hearings.  Sen. John Kennedy (R-LA) questioned Director Chopra on what exactly the rule would require and what the CFPB plans to do with the information. Senator Kennedy introduced a Congressional Review Act resolution of disapproval to the CFPB rule to implement Section 1071, which amends the Equal Credit Opportunity Act (ECOA). Rep. Roger Williams (R-TX) expressed concerns that 1071 will require employees to treat privacy as an afterthought and harm the relationship between main-street banking and the American consumer. AFSA has raised Section 1071 concerns, both in a comment letter to the CFPB and more recently in a letter to the House Small Business Subcommittee on Economic Growth, Tax, and Capital Access.