Hensarling, HFSC Unveil CHOICE Act 2.0

AFSA Staff

On April 19, the House Financial Services Committee (HFSC) released a discussion draft of the new Financial CHOICE Act (CHOICE 2.0), its comprehensive financial regulatory reform bill. A number of significant changes have been made to the bill since its first version in June 2016, including many much-needed reforms to the Consumer Financial Protection Bureau (CFPB) that AFSA has supported. These provisions are provided in Title VII of the 593-page bill.

CHOICE 2.0 terminates the Bureau’s authority to supervise and examine regulated entities. It also eliminates the CFPB’s authority to regulate small-dollar credit, prohibiting the Bureau from exercising any rulemaking, enforcement, or other authority with respect to payday loans, vehicle title loans, or other similar loans. CHOICE 2.0 also repeals the Bureau’s authority to restrict arbitration clauses.

The proposal also nullifies the CFPB’s guidance on indirect auto financing (Bulletin 2013-02) and requires the Bureau to provide for public notice and a comment period before issuing final guidance; make publicly available on its website all studies, data, methodologies or other information relied upon to make the guidance; and to conduct a study on the costs and impacts of the guidance. The Bureau would also be required to subject its rulemaking to more stringent cost-benefit analysis. The CFPB’s power to bring enforcement actions over unfair, deceptive, or abusive acts and practices (UDAAP) is eliminated in the proposal.

CHOICE 2.0 renames the CFPB as the “Consumer Law Enforcement Agency” and subjects it to the regular Congressional appropriations process. Unlike CHOICE 1.0, which restructured the CFPB as a bipartisan commission, the proposal keeps a sole director of the Bureau. However, it does give the President the authority to remove the director at will. While this new version keeps the sole director, AFSA continues to support a bipartisan commission structure, as it would provide a diversity of perspectives, leading to more balanced and effective regulation.