The fiscal year 2017 appropriations bill approved last week by the House Financial Services and General Government Appropriations Subcommittee of the House Appropriations Committee includes the following provisions intended to curb the CFPB’s authority:
A provision under which, effective October 1, 2017, the CFPB would be funded pursuant to the annual congressional appropriations process rather than through transfers from the Federal Reserve as currently provided by Dodd-Frank. During FY 2017 (October 1, 2016 through September 30, 2017), when the CFPB requests transfers from the Fed, it must notify various House committees and include in the notice the amount of the funds requested, an explanation of how the funds will be obligated, and a statement regarding why the funds are necessary to protect consumers. In addition, no later than two weeks after the end of each quarter of every fiscal year, the CFPB must provide the same House committees with a report that includes certain information such as the obligations made during the previous quarter and the actions taken to achieve the goals, objectives, and performance measures of each office.
A provision under which the CFPB’s leadership structure would be changed from a single Director to a five-member Board of Directors appointed by the President.
The bill also includes a provision that states none of the CFPB’s funding “may be used to regulate pre-dispute arbitration agreements…and any regulation finalized by the Bureau to regulate pre-dispute arbitration agreements shall have no legal force or effect until the requirements regarding pre-dispute arbitration specified in the report accompanying [the bill] under the heading “Bureau of Consumer Financial Protection” are fulfilled.” Although the report is not yet available on the Appropriations Committee’s website, the Committee’s press release about the bill states that it “requires the CFPB to study the use of pre-dispute arbitration prior to issuing regulations.” Since the CFPB has already issued its “final” arbitration study, the bill would apparently require the CFPB to conduct a further study before a final rule could become effective. On May 5, 2016, the CFPB issued a proposed rule that would prohibit covered providers of certain consumer financial products and services from using an agreement with a consumer that provides for arbitration of any future dispute between the parties to bar the consumer from filing or participating in a class action with respect to the covered consumer financial product or service. The proposed rule would also require a covered provider that is involved in an individual arbitration pursuant to a pre-dispute arbitration agreement to submit specified arbitral records to the CFPB.