Last month, the White House informed Congress that it opposes a bill passed by the House of Representatives designed to give small businesses a larger role in developing Consumer Financial Protection Bureau (CFPB) rules and regulations.
Currently, the CFPB does not consult with small businesses and lenders before adopting rules and regulations that affect them. Instead, CFPB Director Richard Cordray and other top officials often meet with a 25-member Consumer Advisory Board to discuss potential regulation of the financial sector. Topics discussed at these meetings, which are not open to the public or the press, include new banking rules, new mortgage regulations, rules impacting auto and payday lenders, and government enforcement actions against creditors.
HR 1195, introduced by Rep. Robert Pittenger, R-N.C., would amend the Consumer Financial Protection Act of 2010 and establish a new Small Business Advisory Board to provide the CFPB with information on emerging small business concerns and exert some influence over rulemaking. The Small Business Advisory Board would consist of 15 to 20 members representing the small business concerns of financial products and services providers. The bill also would establish a Credit Union Advisory Council and a Community Bank Advisory Council. These new advisory boards would be funded through a small reduction – 0.1 percent – in the amount of funds the CFPB is permitted to draw from the Federal Reserve over the next 10 years.
The White House cited this reduction in CFPB spending to offset the cost of the new small business advisory boards as the reason for its opposition to the bill. Congress also has experienced pressure from Americans for Financial Reform, a group created by Sen. Elizabeth Warren to reform the banking and financial system. Letters to Democrats in Congress have solicited opposition to the bill, and these letters have been signed by lobbyist groups such as La Raza, National Community Reinvestment Coalition, Greenlining Institute, National People’s Action, and Service Employees International Union (SEIU).