U.S. House Committee on Financial Services: Consumers First: Semi-Annual Report of the Consumer Financial Protection Bureau

On Wednesday, December 14, 2022, at 10:00 a.m. (ET) full Committee Chairwoman Waters and Ranking Member McHenry will host a hybrid hearing entitled, “Consumers First: Semi-Annual Report of the Consumer Financial Protection BureauConsumers."
Witness for this one-panel hearing will be:
• The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau
Overview
Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (DoddFrank Act), the Director of the Consumer Financial Protection Bureau (CFPB) is required to testify before the Committee on its semi-annual report. The most recent semi-annual report issued by CFPB was published on December 6, 2022, which covers agency activity from October 1, 2021 to March 31, 2022. This memo summarizes the CFPB’s most recent report and other activities since April 2022, when CFPB Director Rohit Chopra last testified before the Committee.
Background
In response to the 2008 financial crisis, caused in part by a period of unchecked and rampant predatory lending, Congress passed the Dodd-Frank Act, which created the CFPB as an independent agency within the Federal Reserve System to better protect consumers from unfair, deceptive, or abusive acts or practices in the financial marketplace. In establishing the CFPB, Congress explicitly laid out in statute the agency’s purpose, objectives, and functions.
Since opening its doors in 2011, the CFPB has protected consumers from unfair, deceptive, or abusive acts or practices, and taken action against companies that break the law. The CFPB has sent more than 3.3 million consumer complaints to companies with a 98% timely response rate by financial firms to those complaints. Since its founding, the CFPB has delivered over $14.9 billion in monetary compensation, principal reductions, cancelled debts, and other consumer relief through its enforcement and supervisory work. The CFPB has also issued numerous rulemakings since its creation related to consumer protection. In addition, the CFPB performs research on various consumer financial productsand services, and provides free resources to the public to better understand these products and services, as well as their rights and protections afforded them under the law. Last month, the Department of Justice and CFPB filed a petition with the U.S. Supreme Court to appeal the U.S. Court of Appeals for the Fifth Circuit’s decision in Community Financial Services Association of America v. CFPB, which ruled that the CFPB's funding mechanism is unconstitutional and, therefore, the 2017 payday lending rule is invalid.11 The ruling is in contradiction to the D.C. Circuit and at least six district court rulings that have deemed CFPB’s funding mechanism constitutionally sound, and experts have raised other concerns if the ruling were to be upheld, including the impact on marketplace stability.
Rulemaking Developments
Credit Reporting
Since April 2022, CFPB issued several rules and guidance related to the Fair Credit Reporting Act (FCRA). On June 24, 2022, CFPB issued a rule prohibiting consumer reporting agencies (CRAs) from providing a consumer report that contains adverse information about a consumer that resulted from certain forms of trafficking, if the consumer has provided trafficking documentation to the CRA. This rule was required as part of the Debt Bondage Repair Act sponsored by Ranking Member Patrick McHenry (RNC). Other actions included clarifying that states have flexibility to pass their consumer reporting laws to reflect emerging problems affecting their local economies and citizens, affirming that a CRA may not provide a consumer report to a consumer report user unless it has reason to believe that all of the consumer report information it includes pertains to the consumer who is the subject of the user’s request, and highlighting that a CRA must have reasonable internal controls to prevent the inclusion of false information in consumer reports.
Credit Card Late Fees and Late Payments
On June 22, 2022, CFPB issued an advanced notice of proposed rulemaking, seeking information from credit card issuers, consumer groups, and the public regarding credit card late fees and late payments, and card issuers’ revenue and expenses.18 CFPB inquired about, among other things, factors utilized to set late fee amounts; the deterrent effects of late fees; and card issuers’ revenue and expenses related to their domestic consumer credit card operations. The comment period closed on July 22, 2022...