A New Era for the CFPB: Balancing Power and Reprioritizing Consumer Protections
House Financial Services Subcommittee on Monetary Policy and Trade
2025-03-26
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Source: Congress.gov
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The Subcommittee on Financial Institutions will come to order. Without objection, the chair is authorized to declare a recess of the committee at any time. This hearing is titled, A New Era for the CFPB, Balancing Power and Reprioritizing Consumer Protections. Without objection, all members will have five legislative days within which to submit extraneous materials to the chair for inclusion in the record. I now recognize myself for four minutes for an opening statement. Thank you to our witnesses for joining us today for our first Financial Institution Subcommittee hearing in the 119th Congress. I'm excited to lead this subcommittee again, especially at a time when we have an administration which understands the costs of burdensome overregulation. Nowhere has overregulation and overreach been more evident than at the Consumer Financial Protection Bureau, which became the most unchecked and unaccountable agency in the entire federal government under the previous administration. Under former Director Chopra, the CFPB prioritized politics over sound policy, leading to disastrous outcomes for American consumers. The good news is that a new era has begun under President Trump, an era where businesses are not attacked through press releases or tweets, curtailing their ability to offer financial services and products. Instead, they are encouraged to provide them in a competitive, safe and sound manner. An era where the Bureau's approach is not opaque and abusive, but transparent and fair, an era where those in charge prioritize administrative law over over-regulation by enforcement, avoiding extortionary civil investigative demands, or CIDs. I look forward to working with the CFPB in this new era. Past abuses, like those under Director Chopra, stem from significant structural flaws at the CFPB, which reduce accountability and lead to regulatory swings that stifle innovation and competition.
Republicans have long called for reforms to ensure the Bureau is accountable to the American people. Today, we'll propose transitioning the CFPB to a bipartisan commission and bringing it under congressional appropriations. I recently reintroduced the TABS Act, which would require the CFPB to go through the traditional congressional appropriations process. This would restore the power of the purse to Congress and ensure that the elected representatives of the American people have a say in the Bureau's operations and budget. Beyond the structural flaws that we will explore today, I want to highlight two areas where the CFPB has abused its power and threatened, not helped, consumers in the process. The first is the abuse of CIDs. Under Director Chopra, the Bureau forced law-abiding financial services providers to sift through thousands of pages of business documents and sit for hours of oral testimony without specifying alleged wrongdoing, just hoping to find something. These phishing expeditions were designed to litigate companies into bankruptcy or destroy their reputations doing nothing to protect consumers but harming them by eliminating products and services from the market. Alarmingly, Director Chopra acted as judge, jury, and executioner in each case, rejecting even the appearance of due process. In response, I introduced the CID Reform Act to impose guardrails on the use, scope, and process surrounding CIDs. The second is the Bureau's UDAP authority. The abusiveness prong in the CFPB's UDAP authority is undefined. Under Director Chopra, the CFPB identified abusiveness in the same way Supreme Court Justice Potter Stewart did in describing his threshold test for obscenity. I know it when I see it. This lack of guidance gives institutions no clarity on how to comply and opens the door for abuse by a rogue director.
During President Trump's first term, Bureau Director Kathy Kraninger defined abusiveness. Unsurprisingly, Director Chopra revoked this much-needed guidance. My bill rectifying UDAP Act defines abusiveness to inject clarity and certainty, encouraging financial services providers to operate confidently and in turn increasing consumer access to vital products and services. The best consumer protection is consumer choice. A transparent law-abiding bureau will foster an environment that promotes competition and delivers better outcomes for all Americans. I look forward to discussing these issues today, and I yield back. The chair now recognizes the ranking member of the subcommittee, Dr. Foster, for four minutes for an opening statement. Oh, five minutes, excuse me, five minutes for an opening statement.
Well, thank you, Chair Bauer, and to our witnesses. Under normal circumstances, a change in administration will naturally result in a recalibration of policies, and introducing new legislation with ideas old and new to reflect those shifts in policies will be part of that. Our witnesses today make some valid points about some CFPB policies which could be discussed. But these are not normal times. Since taking office, President Trump, Elon Musk, and Russell Vogt have abused their authority to shut down the CFPB and other agencies that Americans rely on for their financial security. After Doge employees raided the Bureau's headquarters, CFPB employees were told to stop all work. Hundreds were let go, its contracts were canceled, lawsuits brought by the agency against bad actors were summarily dropped, and even the Bureau's name was ripped from the building. These are not reforms. They are illegal attacks on the CFPB's congressionally mandated existence. And also attacks on the dedicated civil servants that fight every day to protect consumers and hold big financial firms accountable.
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