Bill reforming CFPB leadership passes House;
‘CHOICE’ hearings open

July 11, 2016 -- Legislation establishing a five-member board to govern the CFPB passed the House late last week, and hearings in the House on a package of legislation to reform financial regulation begin this week.

Late Thursday, the House passed (by a vote of 239-185) H.R. 5485, the Financial Services and General Government Appropriations Act (FSGG), which would (among many other things, including providing funding for various federal government agencies) change the leadership structure of the CFPB to a five-person board and also place the agency under the appropriations process. CFPB is now funded through the Federal Reserve.

The legislation would also require the bureau to: study the use of arbitration prior to issuing any new regulations; further analyze the proposed short-term, small-dollar lending rule; strongly consider the impact its rules have on small financial institutions including credit unions, and; support efforts to allow residential mortgages held in portfolio to be considered Qualified Mortgages under its lending rules.

The bill’s future is murky, however; the White House has threatened a veto over some of the bill’s provisions, including restricting the IRS's ability to enforce the Affordable Care Act.

Meanwhile, on Tuesday, the House Financial Services Committee opens hearings on Chairman Jeb Hensarling’s (R-Texas) “Financial CHOICE Act,” which (among many other things) would reform the Dodd-Frank legislation passed in the wake of the financial crisis. The legislation would also create a five-member board for the NCUA. NASCUS’s has offered to work with Hensarling to expand the impact of his proposal – by requiring that at least one of the seats on the NCUA board be designated for a candidate who has served as a state credit union supervisor.

The CHOICE bill also calls for an annual report by NCUA detailing the overhead transfer rate and providing a rationale for any amounts the agency proposes to use from the NCUSIF; allows for an 18-month exam cycle for certain credit unions; places the federal financial institution regulatory agencies in the appropriations process “so that Congress can exercise proper oversight,” according to the measure.