Changes to the Consumer Financial Bureau & Dodd-Frank: What You Need to Know

cfpb dodd-frank changes 2017

The Dodd-Frank Act of 2010 was signed into law by the Obama Administration, and it now appears to be in jeopardy. What will this mean for lenders? We’ll have to wait and see, but here are some of the things you should know now.

First, it’s important to understand the process of a bill becoming law because a lot can happen as it progresses through the House and Senate. On June 8th, the House voted to repeal the strict regulations on banks and other financial institutions in a bill introduced by Representative Jeb Hensarling, the powerful Chairman of the House Financial Services Committee. However, this is only a minor victory for the administration as the Financial CHOICE Act bill is expected to have an uncertain future in the Senate.

The disagreements over Dodd-Frank and the construction of the Consumer Financial Protection Bureau (CFPB) fall largely along party lines with Democrats believing lenders need more regulation and Republicans believing the CFPB has a stranglehold on the U.S. economy, with regulations that are too stringent for growth.

The disagreements over Dodd-Frank and the construction of the Consumer Financial Protection Bureau (CFPB) fall largely along party lines with Democrats believing lenders need more regulation and Republicans believing the CFPB has a stranglehold on the U.S. economy, with regulations that are too stringent for growth.


Another Bill to Watch

Meanwhile, as this bill heads to the Senate, a spending bill with large ramifications for the Consumer Financial Protection Bureau was released on the 28th of June by the House Appropriations Committee. It includes significant restraints for financial regulatory agencies. Under the proposed spending bill, Congress would have control of several major financial regulatory budgets.

The spending bill is must-pass legislation, which increases the odds of it becoming law. Still, the new bill (if it became law) would place regulatory functions and budgets of the following agencies under Congressional appropriations processes:

  • The Federal Deposit Insurance Corporation
  • Consumer Financial Protection Bureau (CFPB)
  • National Credit Union Association
  • Federal Housing Finance Agency
  • The Office of the Comptroller of the Currency

This is not a new idea. Congress already controls the budgets of the Securities and Exchange Commission (SEC) and the IRS. However, if this bill becomes law, Congress would have near complete oversight on the budgets of the U.S.’ financial regulatory system.

This funding bill doesn’t restructure the CFPB but does:

  • Bar regulators from implementing some of the rules passed in Dodd-Frank, like the “Volcker Rule”, banning banks from conducting risky investments with their own capital.
  • Prevent the SEC from developing a rule requiring corporations to disclose donations to political candidates and PACS.

Will the Hensarling Bill pass the Senate and will the funding bill be approved? We’ll have to wait and see.

At Bay National Title, we want our clients and the lenders and agents we work with to be able to stay up-to-date on the issues affecting the industry. And we know this isn’t always easy. That’s why we do our best to provide you with the news in the industry that matters to you most. Call us today to better understand our approach and have a closing with a company that keeps your needs in mind.