U.S. Chamber: We Need New Approach to Consumer Financial Protection

Legislation Continues to Head in the Wrong Direction

WASHINGTON, D.C.—The U.S. Chamber of Commerce today expressed concern that H.R. 3126 continues to head in the wrong direction for consumers, the business community, and the economy. The legislation scheduled to be marked up by the House Energy and Commerce Committee adds new provisions that further duplicate regulation covering a vast segment of the business community. The group cautioned that these changes could lead to serious unintended and harmful consequences.

"The U.S. Chamber supports strong consumer protection. However, this bill continues to promote and expand a confusing maze of unclear and duplicative regulatory standards and ill-defined terms," said David Hirschmann, president and CEO of the Chamber's Center for Capital Markets Competitiveness. "It is still unclear who this massive new agency would cover, and that is especially alarming for those businesses who are trying to make their way through the economic recovery."

"While the goal of the CFPA has been to consolidate consumer protection responsibilities of various federal regulators, the changes today would directly duplicate authorities of the CFPA and the FTC," he said. "Not only would industries unrelated to consumer finance be exposed to unprecedented new regulation and litigation—they'll face multiple regulators enforcing the exact same laws."

"We need to take a new, fresh approach to addressing consumer protection," added Hirschmann. "This approach shouldn't involve adding yet another duplicative layer of government to an already overly complex, confusing, and flawed system. Instead, we should strengthen enforcement against illegal and predatory practices by expanding the ability of the seven current federal regulators tasked with consumer protection to do the job right—not by creating a separate, giant new bureaucracy."

The Chamber believes the CFPA is the wrong approach to consumer protection because:

• The bill cuts back significantly on today's preemption of state laws, creating 51 sets of disclosure rules and enforcement regimes in addition to the multiple federal overseers.
  
• The CFPA will have ill-defined, sweeping powers and responsibilities without the appropriate checks and balances. Not only is it unclear what types of businesses would in fact be covered, but there is significant uncertainty regarding what businesses will need to do to comply.
  
• The CFPA is yet another federal regulator that will compete with existing regulators responsible for the overall health of individual financial institutions, enhancing the type of regulatory conflict and arbitrage that contributed to the financial crisis.
  
• The regulatory and legal uncertainty generated by the CFPA will result in a reduction of credit and credit choices for small business consumers.

According to the Chamber, the CFPA approach does not address the fundamental flaws in, or within the existing regulatory structure. The Chamber called for legislation that strengthens enforcement against illegal and predatory practices by expanding the ability of the seven current federal regulators tasked with consumer protection to do the job right.

"Specifically, legislation is needed that would develop clear, concise, and uniform national disclosures about the risks that financial products pose, expand federal rules to close the gaps in regulation, and requires all regulators to work together to ensure like products are regulated equally," said Hirschmann.

The U.S. Chamber is the world's largest business federation representing more than 3 million businesses and organizations of every size, sector, and region.

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