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particular, the agency should not require payday lenders to perform a stringent
full-payment litmus test before approving a loan, which according to the CFPB
would require lenders to determine upfront that consumers can afford to repay
their loans without reborrowing. While we agree with the intent, the problem is
that the CFPBs own banking regulations have actually exacerbated the payday
lending problem, as consumers inability to obtain credit from community banks
have forced them to rely on more expensive lending outfits.
3. Finally, the agency must be subject to more meaningful Congressional oversight.
Congress has remarkably little authority over the agencyno ability to advise and
provide consent in the presidents choice of director, no power to remove the
director for any reason, no power to control funding. Whereas most federal
agencies have their budgets approved by Congress, the CFPBs budget is taken
from the Federal Reserve. This arrangement is possibly unconstitutional and is
certainly imprudent.
Applying a more judicious approach, the agency should be reorganized into a
bipartisan commission of five members, three representing one major party and
two the other, following the model of the Federal Communications Committee.
This proven structure would help establish more accountability in the agency,
and ensure that its policies are less extreme or partisan.
We believe that by implementing these changes, Congress will help ensure that the
CFPB can continue to operate in a way that ensures fairness in the marketplace and does
not harm consumers through unintended consequences.
Sincerely,
___________________________
Joseph J. Colangelo
Executive Director, Consumers Research
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