AG HEALEY, 19 ATTORNEYS GENERAL REJECT FINANCIAL CHOICE ACT’S DISMANTLING OF CRITICAL CONSUMER PROTECTIONS

AG HEALEY, 19 ATTORNEYS GENERAL REJECT FINANCIAL CHOICE ACT’S DISMANTLING OF CRITICAL CONSUMER PROTECTIONSLetter to Congressional Leadership Supports the Work of the CFPB; Opposes Efforts of Anti-Consumer Legislation to Curtail Authority

BOSTON – Attorney General Maura Healey today joined a coalition of 20 state attorneys general in strongly opposing the Financial CHOICE Act of 2017 (H.R. 10), which would eviscerate the role of the Consumer Financial Protection Bureau (CFPB) and eliminate other critical protections for consumers across the country.

In a letter to Speaker Paul Ryan, Majority Leader Kevin McCarthy, Minority Leader Nancy Pelosi, and Minority Whip Steny Hoyer, the attorneys general objected to the proposed law and called attention, in particular, to portions of the Act that would undermine and dismantle the work of the CFPB – the only independent federal agency exclusively focused on consumer financial protection. The Act would eliminate consumer protections implemented as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act in response to the financial crisis. The U.S. House of Representatives intends to vote on the Act this week.

“Created in the aftermath of the worst financial crisis in 80 years, the CFPB has been a vital partner for states in our ongoing efforts to protect students, homeowners, the elderly, veterans, and all consumers from unfair and deceptive practices,” AG Healey said. “Strong consumer protections help create economic opportunity for everyone. I strongly oppose efforts by the Trump Administration and House leadership to dismantle this agency.”

“The Consumer Agency is good at its job. It’s the watchdog that has returned more than $12 billion directly to people who were cheated and run a hotline that’s handled over a million complaints, so it’s no surprise Wall Street wants to chain it up so it can’t do its work,” U.S. Senator Elizabeth Warren said. “State Attorneys General understand the importance of having a strong federal partner in standing up for consumers in their states. That’s why they’re fighting back against the reckless Financial CHOICE Act, which would tie up the CFPB and turn loose predatory financial institutions that want to scam working families.”

As of Jan. 1, 2017, the CFPB has handled over one million consumer complaints, and obtained $11.8 billion in relief for 29 million consumers. The CFPB has taken enforcement actions to stem abuses by student loan originators and servicers, for-profit schools, debt collectors, credit reporting agencies, payday lenders, and foreclosure rescue companies.

The attorneys general say the Act would have significant impacts on consumer protection:

• Unfair and deceptive practices: The Act would eliminate the CFPB’s authority to prohibit unfair, deceptive, and abusive acts and practices (UDAAP), which gives the CFPB the flexibility to respond swiftly to new technologies and practices that harm consumers without the need to wait for legislation. 
• Supervision of large banks: The Act would eliminate the CFPB’s supervision and enforcement authority over large banks and permit financial institutions that meet certain criteria to elect to be exempted from the CFPB’s supervisory authority. 
• Payday loans: The Act prohibits the CFPB from engaging in any rulemaking or enforcement with respect to payday and vehicle title loans. Payday lending has adversely affected the lives of financially vulnerable consumers across the country.
• Usurious interest rates: The Act would restrict states’ abilities to enforce interest rate caps. Currently, there are no federal interest rate caps that cover financial products and services offered by national banks. Rather, national banks are permitted to export the interest rate of their home state and disregard the more stringent interest rates. 
• Mandatory arbitration: The Act would repeal the provision of Dodd-Frank that granted the CFPB authority to study and issue rules regarding arbitration in financial services contracts that prohibit proceeding on a class basis and prevent consumers from seeking redress, particularly for small dollar claims. 
• Transparency: The Act would end the CFPB’s current practice of publicly posting information concerning individual consumer complaints in a searchable database, helping them make informed decisions about the companies with which they choose to do business, and increases transparency in the marketplace.

Joining AG Healey in today’s letter, led by New York Attorney General Eric Schneiderman, are the attorneys general from California, Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Iowa, Maine, Maryland, Minnesota, Mississippi, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, and Washington, along with the Executive Director of Hawaii’s Office of Consumer Protection.