U.S. Congressman Marlin Stutzman, a member of the House Committee on Financial Services, introduced the Bureau Guidance Transparency Act Tuesday, legislation to bring much-needed transparency to the Consumer Financial Protection Bureau (CFPB).
“Washington can’t resist the urge to regulate daily life. On top of its power over the kinds of auto loans, mortgages, and credit cards Americans can choose, the CFPB has decided to use backdoor channels to change policy. By reinterpreting existing law instead of proposing new regulations, the CFPB denies the public an opportunity to comment on important polices.
“The Bureau Guidance Transparency Act would make sure the public has an opportunity to comment on the bureau’s new guidance before it is issued. This common-sense legislation curbs a dangerous ‘regulate first, ask later’ approach by bringing accountability and transparency to some of Washington’s most powerful regulators.
“Unfortunately, the CFPB has opted to change policy through informal guidance rather than formal rulemaking, depriving the public the opportunity to offer input through the legal process established by the Administrative Procedure Act. Most noticeably, on March 21, 2013, the CFPB released an enforcement bulletin entitled ‘Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act.’ The guidance was issued without public input and signaled the CFPB’s intent to hold indirect lenders liable for potentially discriminatory actions taken by auto lenders, who were specifically exempt from oversight by the CFPB. Despite numerous, bipartisan efforts by Congress to seek answers on the CFPB’s methodology and basis for issuing guidance, the bureau has ignored calls for transparency.
“The Bureau Guidance Transparency Act, H.R. 4684, requires that, in issuing any guidance, the CFPB must provide for a public notice and guidance period before issuing the guidance in final form. Additionally, the Bureau must disclose any studies, data, and other analysis relied on in preparing and issuing its final guidance. H.R. 4684, the Bureau Guidance Transparency Act, will be considered during the Financial Institutions and Consumer Credit Subcommittee hearing on ‘Legislative Proposals to Improve Transparency and Accountability at the CFPB.’”