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Are Fireworks Ahead as CFPB Director Testifies on Capitol Hill?

Rohit Chopra, consumer financial protection bureau, enforcement

Consumer Financial Protection Bureau Director Rohit Chopra is set to testify on Capitol Hill this week.

He is scheduled to appear before the Senate Banking Committee Wednesday (June 12) and the House Financial Services Committee Thursday (June 13) to present “The Semi-Annual Report of the Consumer Financial Protection Bureau.”

But there’s a chance that the questioning will extend beyond the rulemaking and enforcement actions that spanned April 2023 to September 2023, the period covered in the latest report.

In terms of what to watch as lawmakers weigh in with questions and comments about the state of everything from open banking to junk fees, here are a few key topics.

After the Supreme Court — What Now?

A few weeks ago, the Supreme Court ruled that the CFPB’s funding structure is constitutional. But the debate does not end there. Some lawmakers have sought to bring the agency more firmly under Congressional oversight.

In the wake of the Supreme Court ruling, Chairman of the House Financial Services Committee Patrick McHenry said the Republican Party will “continue the fight to rein in the rogue CFPB.”

“To be clear, this Supreme Court opinion yet again emphasizes that Congress has exclusive authority and discretion over federal agencies’ funding structures,” he added.

Legislation making its way through the House via the CFPB Transparency and Accountability Reform Act would eliminate the CFPB’s current funding structure, done via transfers from the Federal Reserve, and bring the bureau under the regular appropriations process. The bill would also establish a separate inspector general for the bureau.

Personal Financial Data — Who Sets the Standards?

The semiannual report noted that in the wake of the fall 2023 period, proposed rulemaking has touched on several key areas.

Personal Financial Data Rights may be a subject of particular weight during the hearings this week, as CFPB guidelines on setting technical standards broaden the range of the standard setters themselves, well beyond banks and FinTechs.

It would not be farfetched to expect some questioning on timelines for final rules given the fact that the process for setting standards, per guidance, “must be open to all interested parties, including public interest groups, app developers, and a broad range of financial firms with a stake in open banking.”

The CFPB’s new rule includes a mechanism for the CFPB to, per the announcement, “revoke the recognition of standard setters and a maximum recognition duration of five years, after which recognized standard setters will have to apply for re-recognition.”

Fees — ‘Junk’ or Not?

Among the most hot-button issues is the battle over fees that have been around for decades in financial services, particularly credit card late fees.

Rules from the CFPB have sought to reduce the typical late fees charged by card issuers from an average of $32 to $8 in most cases. The rule was slated to take effect last month but a federal judge in Texas blocked the implementation.

Sen. Tim Scott of South Carolina, a ranking member of the Senate Banking Committee, introduced a measure in April to block the CFPB’s rule. A similar measure was introduced in the House.

At issue — and possibly to be posed to Chopra this week — is whether, as some critics charge, the fee caps would increase credit costs and/or hurt financial services as a whole.