Newsroom

The Senate Banking Committee on Tuesday heard critiques of CFPB's complaint database as well as arguments on the bureau's regulation of the financial industry during a hearing on consumer finance regulations.

In response to a question from committee Chairman Richard Shelby, R-Ala., regarding CFPB's consumer complaint database, U.S. Chamber of Commerce Center for Capital Markets Competitiveness President and CEO David Hirschmann said that while airing consumer complaints is good, CFPB's methodology of posting unverified complaints in a "naming and shaming approach" only creates more confusion for consumers who cannot know which complaints are true.

George Mason University School of Law's Todd Zywicki criticized the Dodd-Frank Durbin Amendment for targeting debit cards, which he noted are not a product that contributed to the financial crisis, and for creating savings for retailers that are not being passed on to consumers. In response to a question from Shelby, Zywicki said cost-benefit analysis is the single most important thing a regulator can do to ensure credit availability while promoting competition, consumer choice, and transparency.

Sen. Dean Heller, R-Nev., asked whether the CFPB has the authority to exempt small community lenders from regulations meant for big banks and whether that authority has been used. Leonard Chanin, of counsel for Morrison and Foerster LLP, said the bureau does have that authority, but it has only used it for exceptions to rules, not in any blanket exemption.

Heller said his state has half as many credit unions and community banks as it did five years ago when Dodd-Frank was passed. He asked Hirschmann if regulations should be tailored to the size of institutions. Hirschmann said they should be, and he added that regulations often "roll downstream" to affect smaller institutions even if they are not intended for them.

Zywicki agreed that credit unions and community banks need protection. "America's consumers are better served when there's robust competition and an even playing field," he said.

In advance of the hearing, NAFCU Vice President of Legislative Affairs Brad Thaler urged committee leaders to support regulatory relief for credit unions. He particularly noted the declining number of credit unions and cited the growing cost and complexity of regulations as a key factor in the decline.

Tomorrow, CFPB Director Richard Cordray will testify before the committee on the bureau's semi-annual report. NAFCU will monitor the hearing for its potential impact on credit unions.