H. Rept. 115-1095 - GIVE USEFUL INFORMATION TO DEFINE EFFECTIVE COMPLIANCE ACT115th Congress (2017-2018)
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115th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 115-1095
======================================================================
GIVE USEFUL INFORMATION TO DEFINE EFFECTIVE COMPLIANCE ACT
_______
December 21, 2018.--Committed to the Committee of the Whole House on
the
State of the Union and ordered to be printed
_______
Mr. Hensarling, from the Committee on Financial Services,
submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 5534]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred
the bill (H.R. 5534) to amend the Consumer Financial Protection
Act of 2010 to provide procedures for guidance issued by the
Bureau of Consumer Financial Protection, and for other
purposes, having considered the same, report favorably thereon
with an amendment and recommend that the bill as amended do
pass.
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Give Useful Information to Define
Effective Compliance Act'' or the ``GUIDE Compliance Act''.
SEC. 2. PROCEDURES FOR BUREAU GUIDANCE.
Section 1022(b) of the Consumer Financial Protection Act of 2010 (12
U.S.C. 5512(b)) is amended by adding at the end the following:
``(5) Procedures for bureau guidance.--
``(A) Definitions.--In this paragraph--
``(i) the term `Bureau' means--
``(I) the Director of the Bureau;
``(II) the Deputy Director of the
Bureau; and
``(III) any employee of the Bureau
described in section 1013(a)(1)(B); and
``(ii) the term `guidance'--
``(I) means--
``(aa) an agency statement of
general applicability and
future effect, other than a
regulatory action, that sets
forth a policy on a statutory,
regulatory, or technical issue
or an interpretation of a
statutory or regulatory issue;
and
``(bb) any written
interpretive rule, bulletin,
statement of policy, letter,
examination manual, frequently
asked question, notice,
directive, news release, blog
post, small entity compliance
guide, or other authoritative
document issued by the Bureau
regarding compliance with a
Federal consumer financial law;
and
``(II) does not include--
``(aa) a purely internal
Bureau policy;
``(bb) a law enforcement
communication such as a
complaint, consent order,
judgment, legal opinion,
warning letter, investigatory
letter, notice of hearing,
civil investigative demand,
subpoena, no-action letter,
advisory opinion, or any
request in lieu of the
foregoing;
``(cc) an individualized
supervisory communication such
as a supervisory letter, report
of examination, memorandum of
understanding, board
resolution, matter requiring
attention, or individualized
communication or agreement
pursuant to the supervisory
authority of the Bureau; or
``(dd) a decision issued
under subtitle E.
``(B) Guidance requirements.--The Director shall
issue guidance that is necessary or appropriate to
enable the Bureau to carry out Federal consumer
financial law, including facilitating compliance with
such law.
``(C) Rulemaking.--
``(i) Proposed rule.--Not later than 18
months after the date of enactment of this
paragraph, the Bureau shall publish in the
Federal Register and on the website of the
Bureau a proposed rule defining--
``(I) each type of guidance the
Bureau shall provide;
``(II) the criteria the Bureau shall
use for selecting each type of
guidance;
``(III) the process and timelines for
requests for guidance;
``(IV) the time periods for the
response of the Bureau to a request for
each type of guidance; and
``(V) a process for amending or
revoking guidance issued under the
rule, including a process for public
input on any proposal to amend or
revoke guidance, unless the Bureau
determines public input is not required
due to public exigency.
``(ii) Final rule.--Not later than 1 year
after the date on which the proposed rule
described in clause (i) is published, the
Bureau shall publish a final rule based on the
proposed rule.
``(D) Reliance on bureau guidance.--No person shall
be held liable for any act done or omitted in good
faith in conformity with any applicable guidance from
the Bureau or any predecessor agency that was in effect
at the time of the act or omission, even if the
guidance is later revoked, amended, or rendered
inconsistent by guidance or action by the Bureau or a
determination by a court of competent jurisdiction.
``(E) Development of a penalty matrix.--
``(i) Proposed rule.--Not later than 18
months after the date of the enactment of this
subparagraph, the Bureau shall publish in the
Federal Register and on the website of the
Bureau a proposed rule establishing guidelines
for determining the size of any civil monetary
penalties issued by the Bureau based on the
severity of the actionable conduct in violation
of a Federal consumer financial law and the
level of culpability. The regulations
prescribed under this paragraph shall, to the
extent possible, align with any chart, matrix,
rule, or guideline published by the Office of
the Comptroller of the Currency, the
Corporation, or the Board of Governors.
``(ii) Final rule.--Not later than 1 year
after the date on which the proposed rule
described in clause (i) is published, the
Bureau shall publish a final rule based on the
proposed rule.''.
Purpose and Summary
Introduced by Representative Sean Duffy on April 17, 2018,
H.R. 5534, the ``Give Useful Information to Define Effective
(GUIDE) Compliance Act'' amends the Dodd-Frank Wall Street
Reform and Consumer Protection Act of 2010 (Dodd-Frank Act)
[Pub. L. 111-203] to provide procedures for guidance issued by
the Bureau of Consumer Financial Protection (BCFP), including
guidance necessary to comply with the law, establishes clear
standards for that guidance and how it is issued, and provides
a safe harbor for good faith reliance on guidance issued by the
Bureau.
Background and Need for Legislation
Since its inception in 2010, the Bureau of Consumer
Financial Protection has operated outside of the expected norms
for a federal supervisory agency. Criticisms against the Bureau
include rulemaking driven by political motivations\1\,
regulation through enforcement\2\, and the tendency to stretch
the Bureau's statutory authority or use novel interpretations
of existing law to support the Bureau's enforcement and
litigation.\3\ The Bureau's former Director, Richard Cordray,
stated:
---------------------------------------------------------------------------
\1\Gary Davis, ``Why Reform is Necessary at the CFPB.'' (Feb. 2017)
Available at https://www.forbes.com/sites/forbesfinancecouncil/2018/02/
07/why-reform-is-necessary-at-the-cfpb/#14a06ba747fa.
\2\https://www.mba.org/issues/residential-issues/cfpb-enforcement-
concerns.
\3\Michael Grunwald, ``Trump Wants to Dismantle Elizabeth Warren's
Agency. Good Luck With That.'' (Dec. 2017) Available at https://
www.politico.com/magazine/story/2017/12/03/trump-cfpb-elizabeth-warren-
215997.
``We wanted to send a message: There's a new cop on
the beat. Pushing the envelope is a loaded phrase, but
that's absolutely what we did.''\4\
---------------------------------------------------------------------------
\4\Id.
Under the previous Director's watch this created an uneven
playing field for financial services businesses. The Bureau's
consumer complaint portal, an unverified public complaint
database of financial service providers and products, was not
an accurate indicator of the Bureau's next rulemaking
initiative. Litigation and enforcement actions could not be
relied upon to set an industry precedent on which businesses
could rely. Previously accepted industry practices could be
cause for future litigation from the Bureau.\5\ Ultimately,
instead of fulfilling the BCFP's mandate to protect consumers,
its actions achieved the opposite result. Banks stopped
offering certain products for fear of litigation and did not
introduce new products because of compliance costs and
potential legal liability. Credit availability then tightened
for consumers and businesses, reduced access to mortgage credit
for families looking to purchase a home and limited s options
for businesses looking to expand.
---------------------------------------------------------------------------
\5\supra note 2. ``The CFPB has published key consent orders and
decisions-including under the Real Estate Settlement Procedures Act
(RESPA)-that diverge from prior rules and interpretations of the
Department of Housing and Urban Development (HUD) that the industry has
relied on for decades.''
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This approach to consumer protection has been reversed by
BCFP Acting Director Mick Mulvaney, who in a memo to staff upon
his arrival signaled that the Bureau would commit to enforcing
the rule of law and no longer be ``pushing the envelope.''\6\
In his memo, Acting Director Mulvaney also promised to engage
in more formal rulemakings, only bring lawsuits based on
``quantifiable and unavoidable harm'', employ a data based
approach to rulemaking, and engage in more robust cost-benefit
analysis. While this fresh perspective is welcome, it is
necessary for Congress to ensure consumers and businesses
remain protected should a subsequent Director choose to stray
from this new direction. In the same memo to Bureau staff,
Acting Director Mulvaney appropriately noted that:
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\6\See https://www.consumerfinancemonitor.com/wp-content/uploads/
sites/14/2018/01/Mulvaney-memo.pdf.
We are government employees, and we work for the
people. That means everyone: those who use credit cards
and those who provide the credit; those who take out
loans and those who make them; those who buy cars and
those who sell them. All of those people are part of
what makes this country great, and all of them deserve
to be treated fairly by their government.\7\
---------------------------------------------------------------------------
\7\Id.
The new approach to consumer financial regulation by the
BCFP demonstrates not only the intent of Congress but also fair
and equal treatment for all market participants from the
customer to the businesses that serve them. This fair, equal,
and transparent system will help foster economic growth and
ensure all Americans have equal access to the financial system
and wide array of products to serve their individual and
specific needs.
FORMALIZING THE GUIDANCE PROCESS AT THE BCFP
Guidance can play an integral role in business decision
making. Clear, reliable guidance can provide businesses with
reliable information to form the basis for making decisions and
investments without concern that their actions could lead to
enforcement orders or fines in the future. Guidance can also
improve the supervision process as examiners have an easier
time determining compliance with additional reference points.
Therefore, it is good policy to encourage regulators to share
insights on how to comply with their rules.
There are several examples of finalized rules from the BCFP
that lack the necessary guidance to provide much needed clarity
for businesses. For instance, during the Financial Institutions
Subcommittee's hearing examining reforms to improve
transparency and accountability at the Bureau, the President of
the American Land Title Association (ALTA), Steven Day, shared
examples where Bureau guidance would have helped to clarify
confusing rules. Specifically, Mr. Day referred to compliance
hurdles associated with the BCFP's TILA-RESPA Integrated
Disclosure (TRID) rule, where the Bureau hosted webinars but
did not provide written guidance, causing headaches in sharing
this information with inquiring customers.\8\ In his testimony
Mr. Day also compared the guidance shared by federal regulators
concerning third-party service providers:
---------------------------------------------------------------------------
\8\United States. Cong. House. Committee on Financial Services.
Hearing on Improving Transparency and Accountability at the Bureau of
Consumer Financial Protection Bureau. June 6, 2018. 115th Cong. 2nd
sess. (statement of Steven G. Day, American Land Title Association).
Available at https://financialservices.house.gov/uploadedfiles/hhrg-
115-ba15-wstate-sday-20180606.pdf.
``Unlike similar guidance from prudential regulators,
the Bureau's bulletin provided little direction to
banks and nonbanks. The Bulletin was two and a half
pages long, compared with 16 pages of guidance from the
Office of the Comptroller of the Currency (OCC) and the
14-page document from the Federal Reserve Board.''\9\
---------------------------------------------------------------------------
\9\Id. at 11-12.
To resolve this issue, the GUIDE Compliance Act creates a
process for the BCFP to issue formal and reliable written
guidance\10\ on how to comply with its written regulations
along with the creation of a civil money penalty matrix similar
to those used by all other federal financial regulators.
Guidance developed under the GUIDE Compliance Act is designed
to interpret requirements of a regulation that was adopted as
part of a formal Administrative Procedures Act (APA) process.
---------------------------------------------------------------------------
\10\Guidance can come in the form of advisory opinions, bulletins,
no-action letters, statements of policy, and answers to Frequently
Asked Questions (FAQs).
---------------------------------------------------------------------------
Hearings
The Subcommittee on Financial Institutions held a hearing
examining matters relating to H.R. 5534 on June 6, 2018.
Committee Consideration
The Committee on Financial Services met in open session on
September 13, 2018, and ordered H.R. 5534 to be reported
favorably to the House, as amended, by a recorded vote of 38
yeas to 14 nays (recorded vote no. FC-206), a quorum being
present. Before the motion to report was offered, the Committee
adopted, by voice vote, an amendment in the nature of a
substitute offered by Mr. Duffy.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. The
sole recorded vote was on a motion by Chairman Hensarling to
report the bill favorably to the as amended. The motion was
agreed to by a recorded vote of 38 yeas to 14 nays (Record vote
no. FC-206), a quorum being present.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the findings and recommendations of
the Committee based on oversight activities under clause
2(b)(1) of rule X of the Rules of the House of Representatives,
are incorporated in the descriptive portions of this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee states that H.R. 5534
will help to clarify any new guidance issued by the BCFP in
order to make guidance clear and succinct for implementation.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of new budget authority, entitlement
authority, or tax expenditures or revenues contained in the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to section 402 of the Congressional
Budget Act of 1974.
Congressional Budget Office Estimates
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, December 19, 2018.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 5534, the GUIDE
Compliance Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Stephen
Rabent.
Sincerely,
Keith Hall,
Director.
Enclosure.
H.R. 5534--GUIDE Compliance Act
H.R. 5534 would require the Consumer Financial Protection
Bureau (CFPB) to issue guidance to facilitate compliance with
federal consumer financial laws. The agency would be required
to issue rules that define various types of guidance; establish
a procedure for issuing, amending, and revoking guidance; and
develop a process for receiving public input on guidance. H.R.
5534 also would require the CFPB to establish guidelines to
determine the size of civil monetary penalties imposed by the
agency.
Using information from the CFPB, CBO estimates that
enacting the bill would require the agency to hire four
employees to handle the preparation of the additional guidance
that the agency would be required to issue and to implement new
procedures for issuing guidance. CBO estimates those efforts
would cost $1 million annually, beginning in 2021. In addition,
CBO estimates that it would cost the agency about $1 million to
issue the required rules under the bill. (Spending by the CFPB
is considered direct spending.) Over the 2019-2028 period, CBO
estimates that implementing the bill would increase direct
spending by $9 million.
Under H.R. 5534, the CFPB also would be required to issue a
rule to establish new guidelines for determining the size of
the civil monetary penalties it issues and to align those
guidelines with those published by other financial regulators.
CBO estimates that amending current agency penalty guidelines
would affect civil penalties collected by the CFPB (which are
recorded in the budget as revenues) and the subsequent direct
spending of those penalties. However, because any changes would
be dependent on the outcome of future agency rules, CBO has no
basis to determine whether future civil monetary penalties
would be higher or lower than under current law.
Because enacting H.R. 5534 would affect direct spending and
revenues, pay-as-you-go procedures apply.
CBO estimates that enacting H.R. 5534 would not increase
net direct spending or on-budget deficits by more than $5
billion in any of the four consecutive 10-year periods
beginning in 2029.
H.R. 5534 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act.
The CBO staff contact for this estimate is Stephen Rabent.
The estimate was reviewed by H. Samuel Papenfuss, Deputy
Assistant Director for Budget Analysis.
Federal Mandates Statement
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995.
The Committee has determined that the bill does not contain
Federal mandates on the private sector. The Committee has
determined that the bill does not impose a Federal
intergovernmental mandate on State, local, or tribal
governments.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of the section
102(b)(3) of the Congressional Accountability Act.
Earmark Identification
With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.
Duplication of Federal Programs
In compliance with clause 3(c)(5) of rule XIII of the Rules
of the House of Representatives, the Committee states that no
provision of the bill establishes or reauthorizes: (1) a
program of the Federal Government known to be duplicative of
another Federal program; (2) a program included in any report
from the Government Accountability Office to Congress pursuant
to section 21 of Public Law 111-139; or (3) a program related
to a program identified in the most recent Catalog of Federal
Domestic Assistance, published pursuant to the Federal Program
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No.
98-169).
Disclosure of Directed Rulemaking
Pursuant to section 3(i) of H. Res. 5, (115th Congress),
the following statement is made concerning directed rule
makings: The Committee estimates that the bill requires
directed rule makings within the meaning of such section.
Section-by-Section Analysis of the Legislation
Section 1. Short title
This section cites H.R. 5534 as the ``Give Useful
Information to Define Effective Compliance Act''
Section 2. Procedures for Bureau guidance
This section cites the requirements to be carried out by
the Director in issuing guidance that is necessary and
appropriate to enable the Bureau to carry out Federal consumer
financial law, including facilitating compliance with such law.
This section also sets forward the definition for guidance as
well as the proposed rule.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, and existing law in which no
change is proposed is shown in roman):
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (new matter is
printed in italic and existing law in which no change is
proposed is shown in roman):
CONSUMER FINANCIAL PROTECTION ACT OF 2010
TITLE X--BUREAU OF CONSUMER FINANCIAL PROTECTION
* * * * * * *
Subtitle B--General Powers of the Bureau
* * * * * * *
SEC. 1022. RULEMAKING AUTHORITY.
(a) In General.--The Bureau is authorized to exercise its
authorities under Federal consumer financial law to administer,
enforce, and otherwise implement the provisions of Federal
consumer financial law.
(b) Rulemaking, Orders, and Guidance.--
(1) General authority.--The Director may prescribe
rules and issue orders and guidance, as may be
necessary or appropriate to enable the Bureau to
administer and carry out the purposes and objectives of
the Federal consumer financial laws, and to prevent
evasions thereof.
(2) Standards for rulemaking.--In prescribing a rule
under the Federal consumer financial laws--
(A) the Bureau shall consider--
(i) the potential benefits and costs
to consumers and covered persons,
including the potential reduction of
access by consumers to consumer
financial products or services
resulting from such rule; and
(ii) the impact of proposed rules on
covered persons, as described in
section 1026, and the impact on
consumers in rural areas;
(B) the Bureau shall consult with the
appropriate prudential regulators or other
Federal agencies prior to proposing a rule and
during the comment process regarding
consistency with prudential, market, or
systemic objectives administered by such
agencies; and
(C) if, during the consultation process
described in subparagraph (B), a prudential
regulator provides the Bureau with a written
objection to the proposed rule of the Bureau or
a portion thereof, the Bureau shall include in
the adopting release a description of the
objection and the basis for the Bureau
decision, if any, regarding such objection,
except that nothing in this clause shall be
construed as altering or limiting the
procedures under section 1023 that may apply to
any rule prescribed by the Bureau.
(3) Exemptions.--
(A) In general.--The Bureau, by rule, may
conditionally or unconditionally exempt any
class of covered persons, service providers, or
consumer financial products or services, from
any provision of this title, or from any rule
issued under this title, as the Bureau
determines necessary or appropriate to carry
out the purposes and objectives of this title,
taking into consideration the factors in
subparagraph (B).
(B) Factors.--In issuing an exemption, as
permitted under subparagraph (A), the Bureau
shall, as appropriate, take into
consideration--
(i) the total assets of the class of
covered persons;
(ii) the volume of transactions
involving consumer financial products
or services in which the class of
covered persons engages; and
(iii) existing provisions of law
which are applicable to the consumer
financial product or service and the
extent to which such provisions provide
consumers with adequate protections.
(4) Exclusive rulemaking authority.--
(A) In general.--Notwithstanding any other
provisions of Federal law and except as
provided in section 1061(b)(5), to the extent
that a provision of Federal consumer financial
law authorizes the Bureau and another Federal
agency to issue regulations under that
provision of law for purposes of assuring
compliance with Federal consumer financial law
and any regulations thereunder, the Bureau
shall have the exclusive authority to prescribe
rules subject to those provisions of law.
(B) Deference.--Notwithstanding any power
granted to any Federal agency or to the Council
under this title, and subject to section
1061(b)(5)(E), the deference that a court
affords to the Bureau with respect to a
determination by the Bureau regarding the
meaning or interpretation of any provision of a
Federal consumer financial law shall be applied
as if the Bureau were the only agency
authorized to apply, enforce, interpret, or
administer the provisions of such Federal
consumer financial law.
(5) Procedures for bureau guidance.--
(A) Definitions.--In this paragraph--
(i) the term ``Bureau'' means--
(I) the Director of the
Bureau;
(II) the Deputy Director of
the Bureau; and
(III) any employee of the
Bureau described in section
1013(a)(1)(B); and
(ii) the term ``guidance''--
(I) means--
(aa) an agency
statement of general
applicability and
future effect, other
than a regulatory
action, that sets forth
a policy on a
statutory, regulatory,
or technical issue or
an interpretation of a
statutory or regulatory
issue; and
(bb) any written
interpretive rule,
bulletin, statement of
policy, letter,
examination manual,
frequently asked
question, notice,
directive, news
release, blog post,
small entity compliance
guide, or other
authoritative document
issued by the Bureau
regarding compliance
with a Federal consumer
financial law; and
(II) does not include--
(aa) a purely
internal Bureau policy;
(bb) a law
enforcement
communication such as a
complaint, consent
order, judgment, legal
opinion, warning
letter, investigatory
letter, notice of
hearing, civil
investigative demand,
subpoena, no-action
letter, advisory
opinion, or any request
in lieu of the
foregoing;
(cc) an
individualized
supervisory
communication such as a
supervisory letter,
report of examination,
memorandum of
understanding, board
resolution, matter
requiring attention, or
individualized
communication or
agreement pursuant to
the supervisory
authority of the
Bureau; or
(dd) a decision
issued under subtitle
E.
(B) Guidance requirements.--The Director
shall issue guidance that is necessary or
appropriate to enable the Bureau to carry out
Federal consumer financial law, including
facilitating compliance with such law.
(C) Rulemaking.--
(i) Proposed rule.--Not later than 18
months after the date of enactment of
this paragraph, the Bureau shall
publish in the Federal Register and on
the website of the Bureau a proposed
rule defining--
(I) each type of guidance the
Bureau shall provide;
(II) the criteria the Bureau
shall use for selecting each
type of guidance;
(III) the process and
timelines for requests for
guidance;
(IV) the time periods for the
response of the Bureau to a
request for each type of
guidance; and
(V) a process for amending or
revoking guidance issued under
the rule, including a process
for public input on any
proposal to amend or revoke
guidance, unless the Bureau
determines public input is not
required due to public
exigency.
(ii) Final rule.--Not later than 1
year after the date on which the
proposed rule described in clause (i)
is published, the Bureau shall publish
a final rule based on the proposed
rule.
(D) Reliance on bureau guidance.--No person
shall be held liable for any act done or
omitted in good faith in conformity with any
applicable guidance from the Bureau or any
predecessor agency that was in effect at the
time of the act or omission, even if the
guidance is later revoked, amended, or rendered
inconsistent by guidance or action by the
Bureau or a determination by a court of
competent jurisdiction.
(E) Development of a penalty matrix.--
(i) Proposed rule.--Not later than 18
months after the date of the enactment
of this subparagraph, the Bureau shall
publish in the Federal Register and on
the website of the Bureau a proposed
rule establishing guidelines for
determining the size of any civil
monetary penalties issued by the Bureau
based on the severity of the actionable
conduct in violation of a Federal
consumer financial law and the level of
culpability. The regulations prescribed
under this paragraph shall, to the
extent possible, align with any chart,
matrix, rule, or guideline published by
the Office of the Comptroller of the
Currency, the Corporation, or the Board
of Governors.
(ii) Final rule.--Not later than 1
year after the date on which the
proposed rule described in clause (i)
is published, the Bureau shall publish
a final rule based on the proposed
rule.
(c) Monitoring.--
(1) In general.--In order to support its rulemaking
and other functions, the Bureau shall monitor for risks
to consumers in the offering or provision of consumer
financial products or services, including developments
in markets for such products or services.
(2) Considerations.--In allocating its resources to
perform the monitoring required by this section, the
Bureau may consider, among other factors--
(A) likely risks and costs to consumers
associated with buying or using a type of
consumer financial product or service;
(B) understanding by consumers of the risks
of a type of consumer financial product or
service;
(C) the legal protections applicable to the
offering or provision of a consumer financial
product or service, including the extent to
which the law is likely to adequately protect
consumers;
(D) rates of growth in the offering or
provision of a consumer financial product or
service;
(E) the extent, if any, to which the risks of
a consumer financial product or service may
disproportionately affect traditionally
underserved consumers; or
(F) the types, number, and other pertinent
characteristics of covered persons that offer
or provide the consumer financial product or
service.
(3) Significant findings.--
(A) In general.--The Bureau shall publish not
fewer than 1 report of significant findings of
its monitoring required by this subsection in
each calendar year, beginning with the first
calendar year that begins at least 1 year after
the designated transfer date.
(B) Confidential information.--The Bureau may
make public such information obtained by the
Bureau under this section as is in the public
interest, through aggregated reports or other
appropriate formats designed to protect
confidential information in accordance with
paragraphs (4), (6), (8), and (9).
(4) Collection of information.--
(A) In general.--In conducting any monitoring
or assessment required by this section, the
Bureau shall have the authority to gather
information from time to time regarding the
organization, business conduct, markets, and
activities of covered persons and service
providers.
(B) Methodology.--In order to gather
information described in subparagraph (A), the
Bureau may--
(i) gather and compile information
from a variety of sources, including
examination reports concerning covered
persons or service providers, consumer
complaints, voluntary surveys and
voluntary interviews of consumers,
surveys and interviews with covered
persons and service providers, and
review of available databases; and
(ii) require covered persons and
service providers participating in
consumer financial services markets to
file with the Bureau, under oath or
otherwise, in such form and within such
reasonable period of time as the Bureau
may prescribe by rule or order, annual
or special reports, or answers in
writing to specific questions,
furnishing information described in
paragraph (4), as necessary for the
Bureau to fulfill the monitoring,
assessment, and reporting
responsibilities imposed by Congress.
(C) Limitation.--The Bureau may not use its
authorities under this paragraph to obtain
records from covered persons and service
providers participating in consumer financial
services markets for purposes of gathering or
analyzing the personally identifiable financial
information of consumers.
(5) Limited information gathering.--In order to
assess whether a nondepository is a covered person, as
defined in section 1002, the Bureau may require such
nondepository to file with the Bureau, under oath or
otherwise, in such form and within such reasonable
period of time as the Bureau may prescribe by rule or
order, annual or special reports, or answers in writing
to specific questions.
(6) Confidentiality rules.--
(A) Rulemaking.--The Bureau shall prescribe
rules regarding the confidential treatment of
information obtained from persons in connection
with the exercise of its authorities under
Federal consumer financial law.
(B) Access by the bureau to reports of other
regulators.--
(i) Examination and financial
condition reports.--Upon providing
reasonable assurances of
confidentiality, the Bureau shall have
access to any report of examination or
financial condition made by a
prudential regulator or other Federal
agency having jurisdiction over a
covered person or service provider, and
to all revisions made to any such
report.
(ii) Provision of other reports to
the bureau.--In addition to the reports
described in clause (i), a prudential
regulator or other Federal agency
having jurisdiction over a covered
person or service provider may, in its
discretion, furnish to the Bureau any
other report or other confidential
supervisory information concerning any
insured depository institution, credit
union, or other entity examined by such
agency under authority of any provision
of Federal law.
(C) Access by other regulators to reports of
the bureau.--
(i) Examination reports.--Upon
providing reasonable assurances of
confidentiality, a prudential
regulator, a State regulator, or any
other Federal agency having
jurisdiction over a covered person or
service provider shall have access to
any report of examination made by the
Bureau with respect to such person, and
to all revisions made to any such
report.
(ii) Provision of other reports to
other regulators.--In addition to the
reports described in clause (i), the
Bureau may, in its discretion, furnish
to a prudential regulator or other
agency having jurisdiction over a
covered person or service provider any
other report or other confidential
supervisory information concerning such
person examined by the Bureau under the
authority of any other provision of
Federal law.
(7) Registration.--
(A) In general.--The Bureau may prescribe
rules regarding registration requirements
applicable to a covered person, other than an
insured depository institution, insured credit
union, or related person.
(B) Registration information.--Subject to
rules prescribed by the Bureau, the Bureau may
publicly disclose registration information to
facilitate the ability of consumers to identify
covered persons that are registered with the
Bureau.
(C) Consultation with state agencies.--In
developing and implementing registration
requirements under this paragraph, the Bureau
shall consult with State agencies regarding
requirements or systems (including coordinated
or combined systems for registration), where
appropriate.
(8) Privacy considerations.--In collecting
information from any person, publicly releasing
information held by the Bureau, or requiring covered
persons to publicly report information, the Bureau
shall take steps to ensure that proprietary, personal,
or confidential consumer information that is protected
from public disclosure under section 552(b) or 552a of
title 5, United States Code, or any other provision of
law, is not made public under this title.
(9) Consumer privacy.--
(A) In general.--The Bureau may not obtain
from a covered person or service provider any
personally identifiable financial information
about a consumer from the financial records of
the covered person or service provider,
except--
(i) if the financial records are
reasonably described in a request by
the Bureau and the consumer provides
written permission for the disclosure
of such information by the covered
person or service provider to the
Bureau; or
(ii) as may be specifically permitted
or required under other applicable
provisions of law and in accordance
with the Right to Financial Privacy Act
of 1978 (12 U.S.C. 3401 et seq.).
(B) Treatment of covered person or service
provider.--With respect to the application of
any provision of the Right to Financial Privacy
Act of 1978, to a disclosure by a covered
person or service provider subject to this
subsection, the covered person or service
provider shall be treated as if it were a
``financial institution'', as defined in
section 1101 of that Act (12 U.S.C. 3401).
(d) Assessment of Significant Rules.--
(1) In general.--The Bureau shall conduct an
assessment of each significant rule or order adopted by
the Bureau under Federal consumer financial law. The
assessment shall address, among other relevant factors,
the effectiveness of the rule or order in meeting the
purposes and objectives of this title and the specific
goals stated by the Bureau. The assessment shall
reflect available evidence and any data that the Bureau
reasonably may collect.
(2) Reports.--The Bureau shall publish a report of
its assessment under this subsection not later than 5
years after the effective date of the subject rule or
order.
(3) Public comment required.--Before publishing a
report of its assessment, the Bureau shall invite
public comment on recommendations for modifying,
expanding, or eliminating the newly adopted significant
rule or order.
* * * * * * *
MINORITY VIEWS
H.R. 5534, the ``Give Useful Information to Define
Effective (``GUIDE'') Compliance Act,'' would direct the
Consumer Financial Protection Bureau (``Consumer Bureau'') to
issue a formal rule in the Federal Register establishing a
scheme for the issuance of guidance materials and activities to
the general public, including regulated entities. Specifically,
this rule would have to define: (1) each type of guidance that
the Consumer Bureau will provide; (2) the criteria for
selecting each of these types; (3) the time periods by which
the Consumer Bureau will respond to requests for guidance; and
(4) the process, including a public notice and comment, by
which guidance can be revoked or rescinded, unless the Consumer
Bureau determines that a comment period is not needed due to
public exigency.
We support considering ways that all Federal financial
regulators, including the Consumer Bureau, could strengthen
their guidance frameworks, and recognize this well-intended aim
of H.R. 5534. However, H.R. 5534 goes too far.
The Consumer Bureau issues a wide variety of guidance,
including interpretative rules, general statements of policy,
and non-rule guidance. As underscored in the Consumer Bureau's
Request for Information (``RFI'') regarding its guidance
implementation and support:\1\
---------------------------------------------------------------------------
\1\Consumer Financial Protection Bureau, Docket No. CFPB-2018-0013,
available at: https://files.consumerfinance.gov/f/documents/
cfpb_rfi_guidance-and-implementation_032018.pdf.
``The Dodd-Frank Act transferred to the [Consumer]
Bureau rulemaking authority that previously had been
exercised by seven other Federal agencies. Those
agencies used a variety of methods for providing
guidance to industry on interpretive questions arising
under the statutes and regulations they administered.
Such guidance is `widely understood to be an essential
instrument of [F]ederal administration' and facilitates
compliance with Federal law. In particular, it allows
agencies to articulate their positions in a `relatively
low cost and flexible' way and facilitates
stakeholders' knowledge of agency positions and
intentions ahead of enforcement or similar
actions.''\2\
---------------------------------------------------------------------------
\2\Id, at page 3.
In describing the importance of agencies' flexible use of
guidance materials in the RFI, the Consumer Bureau cited
several sources,\3\ including Hoctor v. USDA,\4\ in which the
Seventh Circuit Court of Appeals noted that ``[i]t would be no
favor to the public to discourage the announcement of agencies'
interpretations by burdening the interpretative process with
cumbersome formalities''. The RFI also pointed to Cmty.
Nutrition Inst. v. Young,\5\ it which the D.C. Circuit Court of
Appeals ``[r]ecognize[d] that such guidelines have the not
inconsiderate benefits of apprising the regulated community of
the agencies' interpretations as well as informing the exercise
of discretion by agents and officers in the field.''
---------------------------------------------------------------------------
\3\For example, see Nicholas R. Parrillo, ``Federal Agency
Guidance: An Institutional Perspective,'' at 28 (Oct. 12, 2017) (Yale
L. Sch.), available at: https://www.acus.gov/report/agency-guidance-
final-report; and John F. Manning, ``Nonlegislative Rules,'' 72 Geo.
Wash. L. Rev. 893, at 914-15 (2004).
\4\Hoctor v. USDA, 82 F.3d 165, 167 (7th Cir. 1996).
\5\Cmty. Nutrition Inst. v. Young, 818 F.2d. 943, 949 (D.C. Cir.
1987).
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We are concerned that the bill would mandate a complex and
burdensome new scheme on the Consumer Bureau that would impose
unprecedented administrative and operational constraints on the
agency's capacity to issue guidance. Limiting the agency's use
of guidance materials would unduly hamstring its ability to be
nimble and responsive in communicating with the general public
about how it interprets Federal consumer financial laws and
force it to create a formal process for its guidance framework.
We believe that H.R. 5534 would ultimately decrease, not
promote, the overall effectiveness and accessibility of the
Consumer Bureau's guidance materials.
We also are troubled with the broad liability shield
created in the bill that would prohibit the Consumer Bureau
from holding people who fail to comply with guidance, that has
later been altered or rescinded, accountable for their
misconduct, as long as they can assert that they have relied in
good-faith on even outdated guidance materials.
For these reasons, we oppose H.R. 5534.
Maxine Waters.
Carolyn B. Maloney.
Nydia M. Velazquez.
Wm. Lacy Clay.
Michael E. Capuano.
Charlie Crist.
[all]