On June 4, 2024, the CFPB issued its Semi-Annual Report to Congress covering the period beginning April 1, 2023 and ending September 30, 2023. On June 12, 2024, CFPB Director Chopra appeared before the Senate Banking Committee for a hearing, “The Consumer Financial Protection Bureau’s Semi-Annual Report to Congress.” On June 13, 2024, Director Chopra appeared before the House Financial Services Committee for a hearing, “The Semi-Annual Report of the Bureau of Consumer Financial Protection.”

Senate Banking Committee Hearing

The Senate Hearing opened with U.S. Senator Sherrod Brown (D-OH), Chairman of the Senate Banking Committee reading a prepared statement followed by Ranking Member Tim Scott (R-SC) reading a prepared statement. Senator Brown applauded the CFPB actions and addressed the recent Supreme Court decision upholding the constitutionality of the CFPB’s funding mechanism, the proposed rule on medical debt reporting, “junk fees,” servicemembers and veterans. Senator Brown concluded:

This is why it’s so critical that we have the Consumer Financial Protection Bureau. Wall Street has lawyers and lobbyists. Working people have the CFPB. I will always fight for its work that gets money back into people’s bank accounts, that stops bad actors from cheating honest families, and that stands up for consumers when they may have nowhere else to turn.

Senator Scott remarked that “it sounds like we’re talking about two completely different agencies” and raised concerns about the CFPB’s lack of accountability and independence, the litany of lawsuits, the civil investigative demand process, and political coordination. Senator Scott addressed the realities of the consumer impact from the “junk fee” rules:

You’re not protecting consumers or saving people money, instead you’re peddling a false narrative that the Biden administration is doing something to reduce the actual costs. But then, reality hits, and we realize this administration’s actions simply shift who saves and who pays. It is well past time we end this “junk fees” narrative and focus on the junk philosophy behind them. With every action taken, there are trade-offs, and those trade-offs have consequences .In this case, the administration is trading a punchy headline proclaiming they are saving families money today, while actually building higher costs down the road.

Next, Director Chopra read his prepared statement to the Committee, which focused on CFPB initiatives on financial data, medical debt, and credit cards. He remarked that the CFPB will finalize the open banking rules in the fall.

Senator Brown inquired whether any of the large card issuers showed their math in the comments submitted to the CFPB and Director Chopra stated that they did not and the loophole allowed the issuers to receive $10B in extra income. When Senator Brown asked whether the CFPB research suggests that credit card companies can lower interest rates and still be profitable, Director Chopra replies yes.

Senator Scott asked Director Chopra about how many civil investigative demands have been issued under his leadership. Director Chopra remarked that he did not have exact numbers and the enforcement actions have shifted from small actors to large actors. In shifting to “junk fees” Senator Scott remarked that if the credit card late fees and overdraft fee structure goes away they will replaced with something else to maintain profitability or you stop offering products and force consumers to go to unregulated markets. Senator Scott inquired about the inconsistent approach between the government and private sector and why late fees are okay for the IRS but not for business. Without answering the question, Director Chopra replied that “junk fees” are a huge problem in our economy and a bipartisan issue in need of reform.

When Senator Jack Reed (D-RI) asked about the supervision of buy now pay later firms and whether the CFPB needed additional authority, Director Chopra stated, “we have some authority but we are happy to work with you for more authority.” In addressing credit reporting for buy now pay later, Director Chopra re-conveyed concerns from auto and mortgage lenders about consumers’ ability to afford the loans if they know what loans people have and that it is not a requirement of federal law to report loans.

Senator Mike Round (R-SD) inquired whether the CFPB believes that Regulation E requires refunds to consumers that authorize the transfer but the transfers were fraudulently induced. Director Chopra stated that the line is blurry and that Regulation E has some framework but network rules also apply.

In response to questions from Senator Tina Smith (D-MN) about what the CFPB is doing with the Justice Department to address redlining, Director Chopra acknowledged that redlining actions are hard to do case by case basis, the CFPB is working with the industry to determine where barriers exist, and it is clear that more work needs to be done..

We previously blogged about the questioning by Senator John Kennedy (R-LA) about the CFPB’s being funded when the Federal Reserve hasn’t had combined earnings since September 2022.

Senator Elizabeth Warren (D-MA) used most of her five minutes to attack Republicans’ opposition to the CFPB’s continued work on the Biden agenda. She also asked about the CFPB’s focus on mortgage “junk fees.” Chopra confirmed that both mortgage lenders and consumers are concerned about the inflated costs and fees to close on a house.

Senator Katie Britt (R-AL) asked whether the CFPB planned to publish the 1071 data it was collecting. Director Chopra indicated that the data collection has been significantly delayed and the CFPB is not going to make a determination until after they conduct a privacy assessment but confirmed that the CFPB would not publish any identifying information.

House Financial Services Committee Hearing

The House Hearing opened with Chairman Patrick McHenry (R-NC) reading a prepared statement followed by Congresswoman Maxine Waters (D-CA) reading a prepared statement. Next, Director Chopra read his prepared statement to the Committee, which focused on CFPB initiatives on credit cards, medical debt, and open banking. He said, “We are eager to work with the House Financial Services Committee to do more to protect against abuse and misuse of data, including by enshrining stronger protections into law.”

Chairman McHenry remarked:

Director Chopra, under your leadership, this so-called independent agency has become an arm of President Biden’s political operation. Data, facts, economics, and sound analysis take a backseat to politically favorable talking points. Even the Washington Post has called the numbers ‘fuzzy’ surrounding how much consumers could actually save if so-called junk fees were cut. You’ve taken your eye off the ball of consumer financial protection and are instead chasing the shiny political object. We’ve seen how this one ends. It’s never a good outcome for our financial system or the American people.

In speaking with Chairman McHenry on data privacy laws, Director Chopra stated, “the [GLBA privacy] notice is not effective when it comes to meaningful control.” In speaking with Congressman Byron Donalds (R-FL), Director Chopra said, “I would argue in privacy disclosures that disclosures are not enough.” He indicated that the Section 1033 proposed rules will be finalized in October.

Congresswoman Waters discussed the proposed medical debt rule and “junk fees.” In response to “junk fees,” Chopra stated, “Markets work best when people can see the price up front and compare it.” As we have mentioned numerous times credit card late fees and overdraft fees that are being attacked as “junk fees” are disclosed upfront using CFPB model forms.

Congressman Blaine Luetkmeyer (R-MO) asked, “Junk fees, which really is not a legally enforceable term and something you guys have made up – by your definition, are late fees. I have here a letter here from Nicholas Anthony at the Cato Institute; 101 late fees charged by the government. Have you looked into any government late fees at all?” Director Chopra indicated that he would support looking into a lot of those late fees charged by government.

Congressman Emanuel Cleaver, II (D-MO) raised concerns about a particular credit union’s discriminatory practices based on race and asked whether Director Chopra supported a similar community reinvestment assessment process for the credit union space. Chopra indicated that the majority of mortgage lending is outside of banks and he supports stronger CRA requirements for other mortgage lenders.

In response to several inquiries about the auto loan data collection, Director Chopra indicated some hesitancy to move forward with the collection and stated that the CFPB does not have authority to bring enforcement actions against auto dealers.

Congressman William Timmons (R-SC) commented on the wild swings in policy after elections and how it is impeding U.S. businesses. Director Chopra replied, “Under the law, it shouldn’t have been that different. There have been different approaches. We are more focused rule of law approach. We try to enforce the rule as you wrote it.”

When Congressman Zach Nunn (R-IA) asked about whether the Section 1071 data collection of 81 points was creating a treasure trove for cyber actors, Chopra disagreed. He stated, “I appreciate what you are saying. I have to disagree with the 81 data points. We believe that the points that are being collected are directly in line with the statute.”

Both the Senate and House will permit follow up questions to be submitted by members and answers to be submitted by Director Chopra.