House Passes Bill to Weaken Consumer Protections

In a week focused on rolling back regulations, the House passed bills Thursday to weaken the Consumer Financial Protection Bureau (H.R. 3193) and make it more difficult for federal regulatory agencies generally to adopt pro-consumer regulations (H.R. 2804).  Both bills repeat attacks that have not gained traction in the Senate and have been greeted with a veto threat by the President.

Despite that fact, the House voted 232-182 Thursday to undermine the ability of the Consumer Financial Protection Bureau (CFPB) to protect consumers from abusive financial practices.  CFA Legislative Director Rachel Weintraub and Financial Services Director Tom Feltner sent a letter to all members of the House urging opposition to H.R. 3193.  “The Bureau has proven itself to be a transparent, deliberative and data-driven agency that has worked closely with consumers and the financial services industry to develop sensible safeguards against unsafe mortgage lending practices, abusive credit card practices, and unfair and discriminatory financial practices that have harmed consumers and servicemembers,” they wrote.

The bill would: undermine CFPB independence by strengthening the Financial Stability Oversight Council’s already-unique authority to overturn CFPB rules; make the CFPB the only federal financial regulator to have salaries not based on the Federal Reserve Board’s salary schedules, diminishing its ability to attract the best possible employees; revisit the already settled question of whether the CFPB should be led by a director or a commission; eliminate the CFPB’s independence from the congressional appropriations process, singling it out from protections against political interference that are currently granted to the Federal Reserve, the OCC and the FDIC;  require the CFPB to protect consumer privacy, something it already does both when consumers submit personally identifiable information to it and when it studies datasets that do not include personally identifiable information; and  limit the agency’s supervisory access.

“The CFPB is the first federal agency with only one job: to ensure fair financial marketplace for consumers,” Weintraub and Feltner wrote. “The bills included in H.R. 3193 would take away the tools the CFPB needs to do its jobs, undermine its mission and empower the worst elements of the financial industry.”

The House also passed on a 236-179 vote a package of measures (H.R. 2804) that “would undercut or entirely thwart the ability of federal agencies to protect consumers from unsafe food, predatory financial products, systemically risky financial practices, and dangerous consumer products,”  according to a letter from CFA to members of the House urging opposition to the legislation.

The bill includes measures to: amend the Administrative Procedures Act to: require all agencies, regardless of their statutorily mandated missions, to adopt the least costly rule, without consideration of the impact on public health and safety or the impact on our financial marketplace; add unnecessary delays and reporting requirements to the already time consuming process of promulgating important consumer protections; require almost all agency proposals to go through a time-consuming and resource-intensive process to conduct many new and expensive analyses to determine its impact, including any indirect impact, on small business; and make it easier for entities engaged in unlawful conduct to thwart the consent-decree process designed to force the federal government to enforce the law.

A separate measure (H.R. 899) would make the regulatory process more unfair and less transparent by allowing certain interests, business interests, to obtain advanced notice of proposed rules, and provide them with an opportunity to comment on those rules while excluding others from this process.  It was adopted on a 234-176 vote Friday.

“The federal rulemaking process is already lengthy and difficult and, too often, subject to undue industry influence. These bills would make it even more time-consuming, expensive, burdensome or impossible for federal agencies to implement reasonable and much needed consumer protection measures. The end result will be harm to American consumers and harm to the U.S. economy.”

Groups Outline Consensus Positions on Electric Energy Policy Proposal

A broad group of organizations, including CFA, sent a joint letter to the Federal Energy Regulatory Commission earlier this month highlighting their consensus on several core issues related to the on-going rulemaking regarding regional transmission organization (RTO) capacity procurement mechanisms.  The groups included publicly and cooperatively owned electric utilities, national consumer and low-income organizations, state public utility commissions, state consumer advocates, investor-owned utilities, industrial customers, and independent power producers.

Despite representing a range of diverse and often diverging interests, the groups identified a set of core principles related to the policy on which there was broad agreement:

• Load serving entities (LSEs), states, and local regulatory bodies may have excellent policy reasons for preferring to assemble a diverse portfolio of generation and demand-side resources to serve retail electric needs.
• Market rules that RTOs impose to protect prices under administrative capacity procurement constructs should not erect barriers to meeting other important policy goals that might lead LSEs, state and local regulatory bodies to favor local generation over distant generation, newer, more efficient resources over older, less efficient ones, or lower-emitting resources over higher-emitting resources, for example.
• At a time when capacity surpluses can no longer be taken for granted and new resources will have to be developed to comply with new environmental regulations, RTO market rules that effectively penalize long-term contracting and self-supply should be reformed.
• It is up to the Commission to ensure that capacity procurement constructs and the associated market rules work for the retail electric consumers that ultimately pay the bills, and not just for those market participants with the most resources to devote to the administrative process.

The groups urged the Commission “to take further actions in relevant adjudicative and rulemaking dockets to ensure that these principles are honored in RTO capacity procurement mechanisms.”

President Obama Urged to Make Good on Consumer Privacy Rights Promise

Two years since President Obama issued the Consumer Privacy Bill of Rights, a document that laid down the framework for stronger online privacy protections and called for Congress to pass legislation, no bill implementing that policy has emerged. In response, CFA and broad coalition of groups sent a letter to President Obama this week, calling on him to make good on the promise he made two years ago.

“Strong consumer data privacy protections are essential to maintaining consumers’ trust in the technologies and companies that drive the digital economy,” the groups wrote.  “The existing framework in the United States effectively addresses some privacy issues in our increasingly networked society, but additional protections are necessary to preserve consumer trust.”

“Two years ago, you wrote that the ‘Administration has called for Congress to pass legislation that applies the Consumer Privacy Bill of Rights to commercial sectors that are not subject to existing Federal data privacy laws.’ That is precisely what should happen now,” they wrote.  Toward that end, the groups called on the President to “work with those in Congress who favor the privacy rights of Americans, who support updates to privacy law, and who understand why this issue is so critical to so many Americans.”

House Delays Vote on Flood Insurance Bill

The House of Representatives delayed a vote on a flood insurance bill (H.R. 3370) which had been expected to be brought to the floor this week.  CFA Director of Insurance J. Robert Hunter sent a letter to members of the House urging opposition to the bill, which would repeal key portions of the Biggert-Waters Flood Insurance Reform Act of 2012.

“We believe that large majorities in both the House and Senate favor legislation that not only moves the flood insurance program toward a risk-based, actuarially sound system, but also adequately protects homeowners from huge, unaffordable rate increases,” Hunter wrote.  “H.R. 3370 as amended does not achieve either of these goals. Instead, it would sanction unfair and insufficient subsidies, regardless of need, in perpetuity.”

In his letter, Hunter described and urged support for an alternative approach “that would protect existing and future homeowners from these unaffordable rate increases while progressively eliminating federal subsidies that are both costly and unfair to taxpayers … Biggert-Waters commendably went a long way to eliminate flood insurance program subsidies that were costly, uneconomic, and riddled with unwarranted preferences,” he added. “However, it did not fully anticipate the extent of rate shock on unsuspecting homeowners who are now beginning to realize its financial implications. In addressing this rate shock, we urge you to reject the creation of new costly and unfair subsidies and, instead, create a simpler, fairer, more humane transition to a truly risk-based system.”