Five leading financial services industry trade groups have sent a letter to the CFPB urging it to solicit public comments on the final results of its arbitration study before deciding whether to initiate a rulemaking proceeding pursuant to Section 1028(b) of the Dodd-Frank Act. The groups are the American Bankers Association, American Financial Services Association, Consumer Data Industry Association, Financial Services Roundtable, and U.S. Chamber of Commerce.
The letter formalizes a request made by several of these groups’ representatives to CFPB staff during meetings initiated by the CFPB seeking reaction to the study. The reasons the groups give in support of a public comment period are:
- The study’s 739-page length prevents anyone from providing other than generalized reactions during the one to two hour roundtable sessions the CFPB has convened to obtain comment.
- The CFPB has only engaged in limited outreach regarding the study, inviting selected entities and individuals to its meetings soliciting reactions to the study. A public comment period would provide an opportunity for the CFPB to receive comments from all interested persons, including academics who have studied the relevant issues but who have not been asked to comment by the CFPB.
- Soliciting public comment “would at least start the process of compensating for the extreme lack of transparency and refusal to solicit public participation that characterized the Bureau’s study process.” The trade groups note that the CFPB issued only one Request for Information in April 2012 which sought public comment on the topics that it should address in the arbitration study. They state that the CFPB “never informed the public of the topics it had decided to study and sought public comment on them—even though a number of commenters suggested that the Bureau utilize that procedure. The Bureau never convened public roundtable discussions on key issues, as many other agencies routinely do. And the Bureau never sought public input on its tentative findings.” The trade groups assert that a public comment period would provide “a valuable opportunity for the Bureau to receive additional analysis and empirical information that it refused to solicit during the study process.”
- Soliciting public comments would allow the CFPB “to inform itself of the significant defects in the study’s analysis—defects that otherwise will fatally taint any proposed rule that the Bureau might propose based on the study.” The letter provides examples of various shortcomings found by the groups.
- Soliciting public input would be consistent with the CFPB’s rulemaking approach in other contexts, such as debt collection and prepaid cards, where the CFPB has issued advance notices of proposed rulemaking.
The trade groups also state that a public comment period would not delay rulemaking because the CFPB must convene a SBREFA panel before initiating a rulemaking. They assert that the CFPB’s compliance with SBREFA could occur in parallel with a 60-day comment period.