Banking & Credit

Congress’s “Large Bank Protection Act” Would Put Bailed-Out Banks Beyond the CFPB’s Reach While Placing Consumers at Risk

A New Report Says H.R. 3072, the Bureau of Consumer Financial Protection Examination and Reporting Threshold Act of 2017, Would Slash the CFPB's Law Enforcement Powers Over Large Banks

Washington D.C. – The Consumer Federation of America (CFA) today released a report analyzing House Resolution 3072, a proposal to eliminate the Consumer Financial Protection Bureau’s (CFPB) law enforcement jurisdiction over banks with between $10 and $50 billion in assets: “The Large Bank Protection Act: Raising the CFPB’s Enforcement and Supervision Asset Threshold Would Place American Consumers at Risk.”

H.R. 3072, The Bureau of Consumer Financial Protection Examination and Reporting Threshold Act of 2017, sponsored by Rep. Lacy Clay, (D–MO), would cut the number of banks subject to CFPB supervision and enforcement from 124 to just 43. The Bill would do this by changing an “asset threshold”–the total amount of assets a bank must have to be subject to CFPB enforcement and supervisory authority – from $10 billion to $50 billion.

According to the report, changing this asset threshold – a seemingly technical adjustment – would have momentous ramifications for American consumers. Among other findings in the report H.R. 3072 would: 

  • Cut the number of banks subject to CFPB supervision and enforcement by 65%. Currently, just 124 out of 5,679 banks are subject to CFPB enforcement. Raising the CFPB oversight threshold to fifty billion dollars would place an addition 81 of the nation’s largest banks beyond the supervisory and enforcement jurisdiction of the CFPB. Under H.R. 3072 less than one percent (.76%) of all banks would be subject to CFPB law enforcement investigations.
  • Eliminate CFPB oversight of nearly 50 of the largest banks bailed out during the financial crisis. Forty-nine of 81 large banks in the $10 to $50 billion asset range took TARP funds during the Great Recession.
  • Eliminate critical CFPB law enforcement cases against large banks that violate federal law. The report provides detailed examples of past CFPB enforcement actions that would have been impossible under the proposed $50 billion asset threshold. These cases against large banks involved illegal activity like:
    • Unfair home mortgage collection practices that illegally railroaded families into foreclosures and short sales.
    • Discriminatory lending practices that charged black borrowers higher prices than similarly situated white borrowers.
    • Illegal “redlining” where black loan applicants were denied more than twice as often for mortgages as similarly situated white applicants.
    • Deceptively tricking credit card customers into signing up for nearly worthless “add-on” products without their consent.
    • Illegally denying bank customers the full value of funds deposited into their checking and savings accounts.

“After bailing out these banks with taxpayer money, Congress is now considering excluding them from the law enforcement jurisdiction of the agency designed to prevent some of the same behavior that caused the crisis in the first place,” explained Christopher Peterson, CFA’s Director of Financial Services and the John J. Flynn Endowed Professor of Law at the University of Utah.  “American families deserve a financial regulator that will stand up to banks that use tricks or traps to pad their bottom line.”

Contact: Christopher L. Peterson, 202-387-6121 x1020