[House Report 118-789]
[From the U.S. Government Publishing Office]
118th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 118-789
======================================================================
CLARITY IN LENDING ACT
_______
December 3, 2024.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. McHenry, from the Committee on Financial Services, submitted the
following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 8338]
The Committee on Financial Services, to whom was referred
the bill (H.R. 8338) to regulate small-dollar, short-term
credit products, to protect the privacy of lenders, and to
improve the unfair, deceptive, or abusive acts or practices
authority of the Bureau of Consumer Financial Protection, and
for other purposes, having considered the same, reports
favorably thereon with an amendment and recommends that the
bill as amended do pass.
CONTENTS
Page
Purpose and Summary.............................................. 6
Background and Need for Legislation.............................. 7
Related Hearing.................................................. 8
Committee Consideration.......................................... 9
Committee Votes.................................................. 9
Committee Oversight Findings..................................... 13
Performance Goals and Objectives................................. 13
Congressional Budget Office Estimates............................ 13
New Budget Authority, Entitlement Authority, and Tax Expenditures 13
Federal Mandates Statement....................................... 13
Advisory Committee Statement..................................... 13
Applicability to Legislative Branch.............................. 14
Earmark Identification........................................... 14
Duplication of Federal Programs.................................. 14
Section-by-Section Analysis of the Legislation................... 14
Changes in Existing Law Made by the Bill, as Reported............ 16
Minority Views................................................... 28
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Clarity in Lending
Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--SMALL-DOLLAR CREDIT PRODUCTS
Sec. 101. Safe harbor for small-dollar credit products.
TITLE II--RECTIFYING UNDEFINED DESCRIPTIONS OF ABUSIVE ACTS AND
PRACTICES
Sec. 201. Mitigating factors in assessing civil penalties.
Sec. 202. Rulemaking relating to unfair, deceptive or abusive acts or
practices.
Sec. 203. Authority to declare an act unlawful based on discrimination
or service as government contractor.
Sec. 204. Clarifying the abusive standard for the Bureau of Consumer
Financial Protection.
Sec. 205. Notice and opportunity to cure.
Sec. 206. Abusive, unfair, or deceptive acts or practices enforcement
actions.
Sec. 207. Look-back provisions for the Bureau of Consumer Financial
Protection.
TITLE III--SMALL LENDERS EXEMPT FROM NEW DATA AND EXCESSIVE REPORTING
Sec. 301. Small business loan data collection.
TITLE IV--BANK LOAN PRIVACY
Sec. 401. Rulemaking requirement.
TITLE I--SMALL-DOLLAR CREDIT PRODUCTS
SEC. 101. SAFE HARBOR FOR SMALL-DOLLAR CREDIT PRODUCTS.
(a) In General.--The Truth in Lending Act (15 U.S.C. 1601 et seq.) is
amended by inserting after section 109 the following:
``Sec. 110. Safe harbor for small-dollar credit products
``(a) In General.--If a covered entity complies with the requirements
set forth in subsections (b), (c), and (e) with respect to the offering
of a small-dollar product to a consumer, such covered entity shall not
be liable in connection with such offering of a small-dollar product,
for--
``(1) any civil money penalties from any enforcement action
brought by the Bureau, the appropriate Federal banking agency,
or the National Credit Union Administration for a violation of
this title; or
``(2) any damages or other monetary relief through a private
right of action brought under this title.
``(b) Product Structure Requirements.--
``(1) In the case of an installment loan.--If a small-dollar
credit product is structured by a covered entity as an
installment loan--
``(A) the repayment term shall be more than 45 days;
``(B) payments shall be fully amortized across more
than one payment;
``(C) rollovers into new small-dollar credit products
shall be prohibited; and
``(D) the covered entity may not issue any small-
dollar credit product to a consumer if such consumer
has a small-dollar credit product open with such
covered entity at the time such consumer applies for a
small-dollar credit product.
``(2) In the case of a line of credit.--If a small-dollar
credit product is structured by a covered entity as a line of
credit--
``(A) the repayment term for each draw shall be more
than 45 days unless a single payment is used and the
draw is not more than 10 percent of the lesser of
$3,500 or 20 percent of the total amount of a
consumer's average monthly direct deposits during the
preceding six months; and
``(B) payments for each draw shall be fully amortized
across more than one payment, except in the case of any
single-payment loans.
``(3) Rules of construction.--
``(A) In general.--Nothing in this subsection may be
construed to prohibit the Bureau, a Federal banking
agency, or the National Credit Union Administration
from issuing a cease-and-desist order or restitution
order under this title against a covered entity.
``(B) Enforcement of other statutes.--Nothing in this
subsection may be construed to prohibit the Bureau, a
Federal banking agency, or the National Credit Union
Administration from enforcing any provision of law not
contained within this title against a covered entity.
``(c) Underwriting Requirements.--When considering whether to offer a
small-dollar credit product to a specific consumer, a covered entity--
``(1) shall use sound underwriting processes; and
``(2) may analyze internal or external data sources,
including consumer deposit account activity, to assess the
creditworthiness of a consumer.
``(d) Rule of Construction.--Nothing in this title may be construed
to prohibit a covered entity from offering a small-dollar product that
does not comply with the safe harbor requirements set forth under this
section.
``(e) Additional Limitations and Requirements.--
``(1) Balloon payments.--No payment required in association
with a small-dollar credit product offered by a covered entity
may be greater than double the amount of any other payment
required in association with such product.
``(2) Disclosures.--Each covered entity that offers a small-
dollar credit product shall comply with all disclosure
requirements set forth by this title.
``(3) Penalties and fees.--A covered entity may not impose
any prepayment penalty, overdraft fee, or nonsufficient funds
fee in connection with a small-dollar credit product.
``(4) Transfer of amounts.--Amounts made available to a
consumer through a small-dollar credit product offered by a
covered entity shall be disbursed to the account of such
consumer by such covered entity not later than 5 days after the
approval of the consumer for the small-dollar credit product.
``(f) Definitions.--In this section:
``(1) Covered entity.--The term `covered entity' means--
``(A) an insured depository institution;
``(B) an insured credit union;
``(C) a third-party with whom an insured depository
institution has contracted for products or services
related to origination, servicing, or administrative
management of a small-dollar credit product; or
``(D) a third-party with whom an insured credit union
has contracted for products or services related to
origination, servicing, or administrative management of
a small-dollar credit product.
``(2) Federal banking agency definitions.--The terms
`appropriate Federal banking agency' and `Federal banking
agency' have the meaning given those terms, respectively, in
section 3 of the Federal Deposit Insurance Act.
``(3) Insured credit union.--The term `insured credit union'
has the meaning given the term in section 101 of the Federal
Credit Union Act.
``(4) Insured depository institution.--The term `insured
depository institution' has the meaning given the term in
section 3 of the Federal Deposit Insurance Act.
``(5) Small-dollar credit product.--The term `small-dollar
product' means a loan or line of credit with a value of $3,500
or less.''.
(b) Clerical Amendment.--The table of contents for chapter 1 of the
Truth in Lending Act is amended by inserting after the item for section
109 the following:
``110. Safe harbor for small-dollar credit products.''.
TITLE II--RECTIFYING UNDEFINED DESCRIPTIONS OF ABUSIVE ACTS AND
PRACTICES
SEC. 201. MITIGATING FACTORS IN ASSESSING CIVIL PENALTIES.
Section 1055(c) of the Consumer Financial Protection Act of 2010 (12
U.S.C. 5565(c)) is amended by adding at the end the following:
``(6) Rulemaking.--The Bureau shall, not later than 180 days
after the date of the enactment of this paragraph, issue a rule
that establishes policies and procedures relating to the
imposition of civil monetary penalties sought under this
subsection, including the application of the mitigating factors
described in paragraph (3).''.
SEC. 202. RULEMAKING RELATING TO UNFAIR, DECEPTIVE OR ABUSIVE ACTS OR
PRACTICES.
(a) In General.--Section 1031 of the Consumer Financial Protection
Act of 2010 (12 U.S.C. 5531) is amended by striking subsection (b) and
inserting the following:
``(b) Rulemaking.--
``(1) In general.--The Bureau may prescribe rules applicable
to a covered person or service provider identifying as unlawful
unfair, deceptive, or abusive acts or practices in connection
with any transaction with a consumer for a consumer financial
product or service, or the offering of a consumer financial
product or service. Rules under this section may include
requirements for the purpose of preventing such acts or
practices.
``(2) Cost-benefit analysis required.--Any final rule issued
by the Bureau relating to abusive, unfair, or deceptive acts or
practices shall include a cost-benefit analysis.
``(3) Definition of abusive act or practice.--The Bureau
shall, not later than 180 days after the date of the enactment
of this subsection, issue a rule that defines the term `abusive
act or practice' for the purposes of this section.''.
(b) Opportunity for Comment.--The Bureau of Consumer Financial
Protection shall, not later than 180 days after the date of the
enactment of this subsection, allow the public to submit comments with
respect to any confusion about how the Bureau of Consumer Financial
Protection uses its authority with respect to unfair, deceptive, or
abusive acts or practices.
SEC. 203. AUTHORITY TO DECLARE AN ACT UNLAWFUL BASED ON DISCRIMINATION
OR SERVICE AS GOVERNMENT CONTRACTOR.
Section 1031 of the Consumer Financial Protection Act of 2010 (12
U.S.C. 5531), as amended by section 204, is further amended by adding
at the end the following:
``(h) Authority To Declare an Act Unlawful Based on Discrimination or
Service as Government Contractor.--The Bureau may not interpret the
authority of the Bureau relating to unfair, deceptive, or abusive acts
and practices to include--
``(1) discriminatory practices; or
``(2) acts or practices by a covered person performing the
acts or practices pursuant to a contract with a Federal agency
(as defined under section 701(b) of title 5, United States
Code).''.
SEC. 204. CLARIFYING THE ABUSIVE STANDARD FOR THE BUREAU OF CONSUMER
FINANCIAL PROTECTION.
Section 1031 of the Consumer Financial Protection Act of 2010 (12
U.S.C. 5531) is amended--
(1) by redesignating subsections (e) and (f) as subsections
(f) and (g); and
(2) by striking subsection (d) and inserting the following:
``(d) Abusive.--
``(1) In general.--The Bureau shall have no authority under
this section to declare an act or practice of a covered person
abusive in connection with the provision of a consumer
financial product or service, unless the act or practice--
``(A) intentionally and materially interferes with
the ability of a consumer to understand a term or
condition of a consumer financial product or service;
or
``(B) takes unreasonable advantage of--
``(i) a lack of understanding by the consumer
with respect to the possible impact, material
risks, costs, or conditions of the product or
service, or the likelihood of the risks, costs,
or conditions of the product or service
negatively affecting the consumer; and
``(ii) the reasonable reliance the consumer
places on an affirmative action or
representation of such covered person to induce
such consumer to rely on such action or
representation.
``(2) Abusive actions.--An act or practice shall not be
considered abusive if the act or practice--
``(A) is also unfair or deceptive; or
``(B) is otherwise prohibited by Federal consumer
financial law.
``(e) Good-Faith Effort To Comply.--
``(1) In general.--The Bureau may not seek monetary relief
from a covered person under this section unless the covered
person has not established by a preponderance of the evidence
that they made a good-faith effort to comply.
``(2) Authority to seek legal or equitable remedies.--The
limitation described in paragraph (1) shall not restrict the
authority of the Bureau to seek legal or equitable remedies,
such as damages and restitution, to redress an identifiable
consumer injury caused by the abusive acts or practices of such
covered person.''.
SEC. 205. NOTICE AND OPPORTUNITY TO CURE.
Section 1031 of the Consumer Financial Protection Act of 2010 (12
U.S.C. 5531), as amended by section 203, is further amended by adding
at the end the following:
``(i) Notice and Opportunity To Cure.--
``(1) In general.--If a covered person self-identifies a
potential unfair, deceptive, or abusive act or practice carried
out by such covered person, the Bureau shall, not later than 90
days after such self-identification, provide a written notice
in the form of a potential action and request for response
letter or a notice and opportunity to respond and advise letter
of the potential unfair, deceptive, or abusive act or practice
to such covered person and inform the covered person that such
person has 180 days after the date the covered person receives
such notice to cure such potential unfair, deceptive, or
abusive act before the Bureau may pursue other legal action.
``(2) Tolling of statute of limitations.--Any applicable
statute of limitations that applies to conduct under which the
Bureau has given notice and an opportunity to cure shall not
toll until--
``(A) the covered person cures the potential unfair,
deceptive, or abusive act or practice and notifies the
Bureau that such act or practice has been cured;
``(B) the covered person notifies the Bureau that
such covered person will not cure the act or practice;
or
``(C) the 180-day period to cure ends.''.
SEC. 206. ABUSIVE, UNFAIR, OR DECEPTIVE ACTS OR PRACTICES ENFORCEMENT
ACTIONS.
Section 1031 of the Consumer Financial Protection Act of 2010 (12
U.S.C. 5531), as amended by section 205, is further amended by adding
at the end the following:
``(j) Unfair, Deceptive, or Abusive Acts or Practices Enforcement
Actions.--Enforcement actions brought by the Bureau under this section
shall be brought in--
``(1) the United States district court located where the
covered person has its headquarters location; or
``(2) the United States District Court for the District of
Columbia.
``(k) Enforcement Actions.--
``(1) In general.--If the Bureau brings an enforcement action
under this section, the Bureau shall state with particularity
the circumstances that the Bureau alleges constitute a
violation of this section.
``(2) Alternative claims.--If the Bureau brings an
enforcement action under this section--
``(A) claiming that an activity is unfair or
deceptive, the Bureau may not claim in the alternative
that the activity is abusive; and
``(B) claiming that an activity is abusive, the
Bureau may not claim in the alternative that the
activity is unfair or deceptive.''.
SEC. 207. LOOK-BACK PROVISIONS FOR THE BUREAU OF CONSUMER FINANCIAL
PROTECTION.
(a) In General.--Subtitle B of title X of the Consumer Financial
Protection Act of 2010 (12 U.S.C. 5511 et seq.) is amended by adding at
the end the following new section:
``SEC. 1029B. EXAMINATION PERIOD LIMITATIONS.
``(a) In General.--When enforcing Federal consumer financial laws,
the Bureau may not seek a civil money penalty for any violation that
occurred prior to the most recent assignment of a consumer compliance
rating that had not been identified in writing as a material finding or
supervisory concern at the time the rating was assigned.
``(b) Exception in Cases of Fraud or a Material Misrepresentation.--
Subsection (a) shall not apply to a violation that involved fraud or a
material misrepresentation.
``(c) Rule of Construction.--The limitation described in subsection
(a) may not be construed to restrict the ability of the Bureau to seek
other forms of legal or equitable relief available under subparagraphs
(A) through (G) of section 1055(a)(2).''.
(b) Clerical Amendment.--The table of contents in section 1(b) of the
Dodd-Frank Wall Street Reform and Consumer Protection Act is amended by
inserting after the item relating to section 1029A the following:
``Sec. 1029B. Examination period limitations,''.
TITLE III--SMALL LENDERS EXEMPT FROM NEW DATA AND EXCESSIVE REPORTING
SEC. 301. SMALL BUSINESS LOAN DATA COLLECTION.
Section 704B of the Equal Credit Opportunity Act (15 U.S.C. 1691c-2)
is amended--
(1) in subsection (g), by adding at the end the following:
``(4) Compliance with covered rule.--
``(A) In general.--With respect to the covered rule,
the Bureau shall provide a financial institution a 3-
year period beginning on the date the covered rule was
issued to comply with the rule.
``(B) Safe harbor.--After the end of the 3-year
period described under subparagraph (A), the Bureau
shall provide a 2-year safe harbor to a financial
institution during which the financial institution is
required to comply with the covered rule but is not
subject to any penalties for failure to comply with the
covered rule.
``(C) Covered rule defined.--In this paragraph, the
term `covered rule' means the final rule of the Bureau
titled `Small Business Lending Under the Equal Credit
Opportunity Act (Regulation B)' (88 Fed. Reg. 35150,
published May 31, 2023).''; and
(2) in subsection (h)--
(A) by striking paragraph (1) and inserting the
following:
``(1) Financial institution.--The term `financial
institution' means--
``(A) any partnership, company, corporation,
association (incorporated or unincorporated), trust,
estate, cooperative organization, or other entity that
engages in any financial activity; and
``(B) in each of the previous 2 calendar years
originated not less than 500 credit transactions for
small businesses.''; and
(B) by striking paragraph (2) and inserting the
following:
``(2) Small business.--The term `small business' means any
entity with gross annual revenues of $1,000,000 or less in the
most recently completed fiscal year.''.
TITLE IV--BANK LOAN PRIVACY
SEC. 401. RULEMAKING REQUIREMENT.
Section 704B(e)(4) of the Equal Credit Opportunity Act (15 U.S.C.
1691c-2(e)(4)) is amended--
(1) by striking ``The Bureau may,'' and inserting:
``(A) In general.--The Bureau may,''; and
(2) by adding at the end the following:
``(B) Rulemaking requirement.--The Bureau shall,
before deleting or modifying data under this paragraph,
issue, through advance notice and comment, a rule that
includes a description of what modifications and
deletions the Bureau intends to make to the data and
how such modifications and deletions will advance a
privacy interest.''.
Purpose and Summary
Introduced on May 10, 2024, by Representative Young Kim,
H.R. 8338, the Clarity in Lending Act is a compilation of four
previously introduced bills.
Title I--H.R. 8356, a bill to amend the Truth in Lending Act to allow
covered entities to offer small-dollar credit products, and for
other purposes was introduced on May 10, 2024, by Rep. Young
Kim (R-CA)
Title I would amend the Truth in Lending Act to provide a
safe harbor for depository institutions to offer responsible
small-dollar credit products.
Title II--H.R. 6789, the Rectifying Undefined Descriptions of Abusive
Acts and Practices Act was introduced on December 14, 2023, by
Rep. Andy Barr (R-KY)
Title II would clarify standards for unfair, deceptive, or
abusive acts or practices (UDAAP) enforcement actions brought
by the Consumer Financial Protection Bureau (CFPB). The title
would require the CFPB to issue a rule within 180 days of
enactment that establishes policies and procedures relating to
the imposition of civil monetary penalties.
The title would also require the CFPB to issue within 180
days a rule defining ``abusive acts and practices'' and would
allow the CFPB to promulgate rules identifying unfair,
deceptive, or abusive acts or practices relating to consumer
financial products or services, so long as those rules include
cost-benefit analyses. In addition, CFPB would be required to
solicit public comment within 180 days regarding any confusion
about how the CFPB uses its authority with respect to unfair,
deceptive, or abusive acts or practices.
The title would prohibit the CFPB from interpreting UDAAP
to include discriminatory practices, or practices that covered
persons are performing in compliance with a contract with a
federal agency. It would confirm that ``abusive'' acts or
practices are intentional and would ensure ``abusive acts or
practices'' are not able to also be considered ``unfair,''
``deceptive,'' or otherwise prohibited by federal consumer
financial law. It would establish a procedure for covered
persons that self-identify potential unfair, deceptive, or
abusive acts or practices to report and provide them with an
opportunity to cure.
The title would require enforcement actions for UDAAP
violations to be brought in U.S. district courts where the
company's headquarters is located or the U.S. District Court
for the District of Columbia. The title would require the CFPB
to clearly identify the circumstances in which an allegation
constitutes a UDAAP violation. The title would also prohibit
the CFPB from bringing enforcement actions on duplicative
claims of ``unfair'' or ``deceptive'' and ``abusive'' on the
same action.
The title would prohibit the CFPB from seeking a civil
money penalty for any violation that occurred prior to the most
recent assignment of a consumer compliance rating that had not
been identified in writing as a material finding or supervisory
concern at the time the rating was assigned, except in cases of
fraud or material misrepresentation.
Title III--H.R. 1806, the Small Lenders Exempt from New Data and
Excessive Reporting Act, was introduced on March 27, 2023, by
Rep. French Hill (R-AR)
Title III would exempt the smallest financial institutions
from the requirements of the CFPB's Small Business Lending Rule
(pursuant to Section 1071 of the Dodd-Frank Act). The title
would raise the origination threshold to at least 500 credit
transactions to small businesses in each of the preceding two
years and lower the gross annual revenue threshold to $1
million or less. The title would also require a three-year
compliance deadline and a two-year safe harbor from any
penalties for failure to comply.
Title IV--H.R. 1810, the Bank Loan Privacy Act, was introduced on March
27, 2023, by Rep. Blaine Luetkemeyer (R-MO)
Title IV would require the CFPB to clarify, through a
notice-and-comment rulemaking, the way information collected
under the CFPB's Small Business Lending Rule (pursuant to
Section 1071 of the Dodd-Frank Act) will be published.
Background and Need for Legislation
Title I: Having access to a wide array of financial
options--like small-dollar credit products from state and
federally-regulated financial institutions--can empower
consumers and allow them to attain financial security. Allowing
covered entities to offer small-dollar credit products would
provide consumers with additional access to affordable and
responsible credit, complementing products offered by
traditional credit sources. This title was modeled after the
``Interagency Lending Principles for Offering Responsible
Small-Dollar Loans'' issued in May 2020 by the Board of
Governors of the Federal Reserve System, Federal Deposit
Insurance Corporation, National Credit Union Administration,
and Office of the Comptroller of the Currency.\1\
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\1\https://www.occ.gov/news-issuances/news-releases/2020/nr-ia-
2020-65a.pdf.
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Title II: The banking industry and the broader financial
services market--particularly depository institutions--have
been left without clarity of the definition of ``abusive'' acts
or practices. Moreover, covered entities have received
insufficient guidance from the CFPB on what would constitute a
UDAAP violation. This title provides much-needed clarity and
would rein in the CFPB's excessive posture on ``abusive'' acts
or practices by adding the requirement to prove intentional
misconduct.
Title III: On March 30, 2023, the CFPB issued a final rule
to implement Section 1071 of the Dodd-Frank Act, ``Small
Business Data Collection.'' The final rule will expand data
collection requirements for financial institutions in the small
business lending market. The rule's burdensome data collection
requirements on financial institutions will drive financial
institutions to consider merging to afford compliance costs.
Covered entities subject to the final rule remain concerned
with the short timeframe available to allow sufficient
compliance systems and the potential consequences of increased
compliance burdens on the availability of and access to
affordable small business credit.
Under the rule, any lender who originates at least 100
loans annually to small businesses with a gross revenue of up
to $5 million in its most recent fiscal year will be required
to collect certain data related to borrowers' demographic
information. The CFPB will implement the rule in phases: (1)
Lenders who originate at least 2,500 small business loans
annually must collect data beginning on October 1, 2024; (2)
Lenders who originate at least 500 loans annually must collect
data beginning April 1, 2025; and (3) Lenders who originate at
least 100 loans annually must collect data beginning January 1,
2026.
Title IV: On March 30, 2023, the CFPB issued a final rule
to implement Section 1071 of the Dodd-Frank Act, ``Small
Business Data Collection.'' The final rule will expand data
collection requirements for financial institutions in the small
business lending market. Covered entities subject to the final
rule remain concerned by the ability of the CFPB to protect
small businesses' data. The bill will create certainty and
clear rules of the road at the CFPB, whose confusing
regulations and expectations are driving consolidation in the
financial sector.
Related Hearing
Pursuant to clause 3(c)(6) of rule XIII, the following
hearings were used to develop H.R. 8338: The Committee on
Financial Services held a hearing on March 7, 2024, titled
``Politicized Financial Regulation and its Impact on Consumer
Credit and Community Development.'' The Committee on Financial
Services held a hearing on May 1, 2024, hearing titled ``Merger
Policies of the Federal Banking Agencies.''
Committee Consideration
The Committee on Financial Services met in open session on
May 16, 2014, and ordered H.R. 8338 to be reported favorably as
amended to the House by a recorded vote of 27 ayes to 22 nays
(Record vote no. FC-147), a quorum being present. Before the
question was called to order the bill favorably reported, the
Committee adopted an amendment in the nature of a substitute
offered by Mrs. Kim by voice vote.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the order to report legislation and amendments thereto. H.R.
8338 was ordered reported favorably as amended to the House by
a recorded vote of 27 ayes to 22 nays (Record vote no. FC-147),
a quorum being present.
An amendment offered by Ms. Garcia, no. 6, was not agreed
to by a recorded vote of 22 ayes to 27 nays, a quorum being
present (Recorded vote no. FC-145).
An amendment offered by Ms. Waters, no. 7, was not agreed
to by a recorded vote of 22 ayes to 27 nays, a quorum being
present (Recorded vote no. FC-146).
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the findings and recommendations of
the Committee, based on oversight activities under clause
2(b)(1) of rule X of the Rules of the House of Representatives,
are incorporated in the descriptive portions of this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the goal of H.R. 8338 is to bring
clarity to consumer lending, ensuring that consumers have
adequate choices to meet their borrowing needs and that
responsible financial institutions are willing to offer
consumer products and services without fear of regulators. This
bill also brings much needed clarity to the CFPB's UDAAP
authority by creating processes and setting clear guidelines
for CFPB's enforcement of law and regulation. Finally, this
bill helps mitigate the detrimental effects of the CFPB's final
Small Business Data Collection Rule, implementing section 1071
of Dodd-Frank. The rule will limit small business lenders'
ability to lend by imposing burdensome data collection
requirements.
Congressional Budget Office Estimates
The Committee has requested but not received a cost
estimate from the Director of the Congressional Budget Office.
However, pursuant to clause 3(d)(1) of House rule XIII, the
Committee will adopt as its own the cost estimate by the
Director of the Congressional Budget Office once it has been
prepared.
New Budget Authority, Entitlement Authority, and Tax Expenditures
The Committee has requested but not received an estimate
from the Director of the Congressional Budget Office. However,
pursuant to clause 3(c)(2) of rule XIII of the Rules of the
House of Representatives, once an estimate has been prepared by
the Director of the Congressional Budget Office, as required by
section 402 of the Congressional Budget Act of 1973, the
Committee will adopt as its own the estimate of new budget
authority, entitlement authority, or tax expenditures or
revenues.
Federal Mandates Statement
The Committee has requested but not received from the
Director of the Congressional Budget Office an estimate of the
Federal mandates pursuant to section 423 of the Unfunded
Mandates Reform Act. The Committee will adopt the estimate once
it has been prepared by the Director.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Earmark Identification
With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.
Duplication of Federal Programs
Pursuant to clause 3(c)(5) of rule XIII of the Rules of the
House of Representatives, the Committee states that no
provision of the bill establishes or reauthorizes a program of
the Federal Government known to be duplicative of another
Federal program, including any program that was included in a
report to Congress pursuant to section 21 of the Public Law 111
139 or the most recent Catalog of Federal Domestic Assistance.
Section-by-Section Analysis of the Legislation
Section 1. Short title; table of contents
TITLE I--SMALL-DOLLAR CREDIT PRODUCTS
Sec. 101. Safe harbor for small-dollar credit products
Title I would amend the Truth in Lending Act to provide a
safe harbor for depository institutions to offer responsible
small-dollar credit products.
TITLE II--RECTIFYING UNDEFINED DESCRIPTIONS OF ABUSIVE ACTS AND
PRACTICES
Sec. 401. Mitigating factors in assessing civil penalties
This section would require the CFPB to issue a rule within
180 days of enactment that establishes policies and procedures
relating to the imposition of civil monetary penalties.
Sec. 402. Rulemaking relating to unfair, deceptive or abusive acts or
practices
This section would require the CFPB to issue within 180
days a rule defining ``abusive acts and practices'' and would
allow the CFPB to promulgate rules identifying unlawful unfair,
deceptive, or abusive acts or practices relating to consumer
financial products or services, so long as those rules include
cost-benefit analyses. The title would also require the CFPB to
solicit public comment within 180 days regarding any confusion
about how the CFPB uses its authority with respect to unfair,
deceptive, or abusive acts or practices.
Sec. 403. Authority to declare an act unlawful based on discrimination
or service as government contractor
This section would prohibit the CFPB from interpreting
unfair, deceptive, or abusive acts or practices to include
discriminatory practices, or practices that covered persons are
performing pursuant to a contract with a federal agency.
Sec. 404. Clarifying the abusive standard for the Bureau of Consumer
Financial Protection
This section would confirm that ``abusive'' acts or
practices are intentional and would ensure ``abusive acts or
practices'' are not able to also be considered ``unfair,''
``deceptive,'' or otherwise prohibited by federal consumer
financial law.
Sec. 405. Notice and opportunity to cure
This section would establish a procedure for covered
persons that self-identify potential unfair, deceptive, or
abusive acts or practices to report and an opportunity to cure.
Sec. 406. Abusive, unfair, or deceptive acts or practices enforcement
actions
This section would require enforcement actions for UDAAP
violations are brought in U.S. district courts where the
company's headquarters is located or the U.S. District Court
for the District of Columbia. The title would require the CFPB
to clearly identify the circumstances they are alleging
constitute a UDAAP violation. The title would also prohibit the
CFPB from bringing enforcement actions on duplicative claims of
``unfair'' or ``deceptive'' and ``abusive'' on the same action.
Sec. 407. Look-back provisions for the Bureau of Consumer Financial
Protection
The section would prohibit the CFPB from seeking a civil
money penalty for any violating conduct that occurred prior to
the most recent assignment of a consumer compliance rating that
had not been identified in writing as a material finding or
supervisory concern at the time the rating was assigned, except
in cases of fraud or material misrepresentation.
TITLE III--SMALL LENDERS EXEMPT FROM NEW DATA AND EXCESSIVE REPORTING
Sec. 201. Small business loan data collection
Title III would exempt the smallest financial institutions
from the requirements of the CFPB's Small Business Lending Rule
(pursuant to Section 1071 of the Dodd-Frank Act). The title
would raise the origination threshold to at least 500 credit
transactions to small businesses in each of the preceding two
years and lower the gross annual revenue threshold to $1
million or less. The title would also require a three-year
compliance deadline and a two-year safe harbor from any
penalties for failure to comply.
TITLE IV--BANK LOAN PRIVACY
Sec. 301. Rulemaking requirement
This bill requires the Consumer Financial Protection Bureau
to issue a rule prior to deleting or modifying publicly
available small business loan data due to privacy concerns.
Specifically, the bureau must describe the intended
modifications and deletions and explain how such modifications
and deletions will advance a privacy interest.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):
TRUTH IN LENDING ACT
* * * * * * *
TITLE I--CONSUMER CREDIT COST DISCLOSURE
* * * * * * *
CHAPTER 1--GENERAL PROVISIONS
Sec.
101. Short title.
* * * * * * *
[110. ]
Sec. 110. Safe harbor for small-dollar credit products.
* * * * * * *
Sec. 110. Safe harbor for small-dollar credit products
(a) In General.--If a covered entity complies with the
requirements set forth in subsections (b), (c), and (e) with
respect to the offering of a small-dollar product to a
consumer, such covered entity shall not be liable in connection
with such offering of a small-dollar product, for--
(1) any civil money penalties from any enforcement
action brought by the Bureau, the appropriate Federal
banking agency, or the National Credit Union
Administration for a violation of this title; or
(2) any damages or other monetary relief through a
private right of action brought under this title.
(b) Product Structure Requirements.--
(1) In the case of an installment loan.--If a small-
dollar credit product is structured by a covered entity
as an installment loan--
(A) the repayment term shall be more than 45
days;
(B) payments shall be fully amortized across
more than one payment;
(C) rollovers into new small-dollar credit
products shall be prohibited; and
(D) the covered entity may not issue any
small-dollar credit product to a consumer if
such consumer has a small-dollar credit product
open with such covered entity at the time such
consumer applies for a small-dollar credit
product.
(2) In the case of a line of credit.--If a small-
dollar credit product is structured by a covered entity
as a line of credit--
(A) the repayment term for each draw shall be
more than 45 days unless a single payment is
used and the draw is not more than 10 percent
of the lesser of $3,500 or 20 percent of the
total amount of a consumer's average monthly
direct deposits during the preceding six
months; and
(B) payments for each draw shall be fully
amortized across more than one payment, except
in the case of any single-payment loans.
(3) Rules of construction.--
(A) In general.--Nothing in this subsection
may be construed to prohibit the Bureau, a
Federal banking agency, or the National Credit
Union Administration from issuing a cease-and-
desist order or restitution order under this
title against a covered entity.
(B) Enforcement of other statutes.--Nothing
in this subsection may be construed to prohibit
the Bureau, a Federal banking agency, or the
National Credit Union Administration from
enforcing any provision of law not contained
within this title against a covered entity.
(c) Underwriting Requirements.--When considering whether to
offer a small-dollar credit product to a specific consumer, a
covered entity--
(1) shall use sound underwriting processes; and
(2) may analyze internal or external data sources,
including consumer deposit account activity, to assess
the creditworthiness of a consumer.
(d) Rule of Construction.--Nothing in this title may be
construed to prohibit a covered entity from offering a small-
dollar product that does not comply with the safe harbor
requirements set forth under this section.
(e) Additional Limitations and Requirements.--
(1) Balloon payments.--No payment required in
association with a small-dollar credit product offered
by a covered entity may be greater than double the
amount of any other payment required in association
with such product.
(2) Disclosures.--Each covered entity that offers a
small-dollar credit product shall comply with all
disclosure requirements set forth by this title.
(3) Penalties and fees.--A covered entity may not
impose any prepayment penalty, overdraft fee, or
nonsufficient funds fee in connection with a small-
dollar credit product.
(4) Transfer of amounts.--Amounts made available to a
consumer through a small-dollar credit product offered
by a covered entity shall be disbursed to the account
of such consumer by such covered entity not later than
5 days after the approval of the consumer for the
small-dollar credit product.
(f) Definitions.--In this section:
(1) Covered entity.--The term ``covered entity''
means--
(A) an insured depository institution;
(B) an insured credit union;
(C) a third-party with whom an insured
depository institution has contracted for
products or services related to origination,
servicing, or administrative management of a
small-dollar credit product; or
(D) a third-party with whom an insured credit
union has contracted for products or services
related to origination, servicing, or
administrative management of a small-dollar
credit product.
(2) Federal banking agency definitions.--The terms
``appropriate Federal banking agency'' and ``Federal
banking agency'' have the meaning given those terms,
respectively, in section 3 of the Federal Deposit
Insurance Act.
(3) Insured credit union.--The term ``insured credit
union'' has the meaning given the term in section 101
of the Federal Credit Union Act.
(4) Insured depository institution.--The term
``insured depository institution'' has the meaning
given the term in section 3 of the Federal Deposit
Insurance Act.
(5) Small-dollar credit product.--The term ``small-
dollar product'' means a loan or line of credit with a
value of $3,500 or less.
* * * * * * *
TITLE VII--EQUAL CREDIT OPPORTUNITY
* * * * * * *
SEC. 704B. SMALL BUSINESS LOAN DATA COLLECTION.
(a) Purpose.--The purpose of this section is to facilitate
enforcement of fair lending laws and enable communities,
governmental entities, and creditors to identify business and
community development needs and opportunities of women-owned,
minority-owned, and small businesses.
(b) Information Gathering.--Subject to the requirements of
this section, in the case of any application to a financial
institution for credit for women-owned, minority-owned, or
small business, the financial institution shall--
(1) inquire whether the business is a women-owned,
minority-owned, or small business, without regard to
whether such application is received in person, by
mail, by telephone, by electronic mail or other form of
electronic transmission, or by any other means, and
whether or not such application is in response to a
solicitation by the financial institution; and
(2) maintain a record of the responses to such
inquiry, separate from the application and accompanying
information.
(c) Right To Refuse.--Any applicant for credit may refuse to
provide any information requested pursuant to subsection (b) in
connection with any application for credit.
(d) No Access by Underwriters.--
(1) Limitation.--Where feasible, no loan underwriter
or other officer or employee of a financial
institution, or any affiliate of a financial
institution, involved in making any determination
concerning an application for credit shall have access
to any information provided by the applicant pursuant
to a request under subsection (b) in connection with
such application.
(2) Limited access.--If a financial institution
determines that a loan underwriter or other officer or
employee of a financial institution, or any affiliate
of a financial institution, involved in making any
determination concerning an application for credit
should have access to any information provided by the
applicant pursuant to a request under subsection (b),
the financial institution shall provide notice to the
applicant of the access of the underwriter to such
information, along with notice that the financial
institution may not discriminate on the basis of such
information.
(e) Form and Manner of Information.--
(1) In general.--Each financial institution shall
compile and maintain, in accordance with regulations of
the Bureau, a record of the information provided by any
loan applicant pursuant to a request under subsection
(b).
(2) Itemization.--Information compiled and maintained
under paragraph (1) shall be itemized in order to
clearly and conspicuously disclose--
(A) the number of the application and the
date on which the application was received;
(B) the type and purpose of the loan or other
credit being applied for;
(C) the amount of the credit or credit limit
applied for, and the amount of the credit
transaction or the credit limit approved for
such applicant;
(D) the type of action taken with respect to
such application, and the date of such action;
(E) the census tract in which is located the
principal place of business of the women-owned,
minority-owned, or small business loan
applicant;
(F) the gross annual revenue of the business
in the last fiscal year of the women-owned,
minority-owned, or small business loan
applicant preceding the date of the
application;
(G) the race, sex, and ethnicity of the
principal owners of the business; and
(H) any additional data that the Bureau
determines would aid in fulfilling the purposes
of this section.
(3) No personally identifiable information.--In
compiling and maintaining any record of information
under this section, a financial institution may not
include in such record the name, specific address
(other than the census tract required under paragraph
(1)(E)), telephone number, electronic mail address, or
any other personally identifiable information
concerning any individual who is, or is connected with,
the women-owned, minority-owned, or small business loan
applicant.
(4) Discretion to delete or modify publicly available
data.--[The Bureau may,]
(A) In general._The Bureau may, at its
discretion, delete or modify data collected
under this section which is or will be
available to the public, if the Bureau
determines that the deletion or modification of
the data would advance a privacy interest.
(B) Rulemaking requirement.--The Bureau
shall, before deleting or modifying data under
this paragraph, issue, through advance notice
and comment, a rule that includes a description
of what modifications and deletions the Bureau
intends to make to the data and how such
modifications and deletions will advance a
privacy interest.
(f) Availability of Information.--
(1) Submission to bureau.--The data required to be
compiled and maintained under this section by any
financial institution shall be submitted annually to
the Bureau.
(2) Availability of information.--Information
compiled and maintained under this section shall be--
(A) retained for not less than 3 years after
the date of preparation;
(B) made available to any member of the
public, upon request, in the form required
under regulations prescribed by the Bureau;
(C) annually made available to the public
generally by the Bureau, in such form and in
such manner as is determined by the Bureau, by
regulation.
(3) Compilation of aggregate data.--The Bureau may,
at its discretion--
(A) compile and aggregate data collected
under this section for its own use; and
(B) make public such compilations of
aggregate data.
(g) Bureau Action.--
(1) In general.--The Bureau shall prescribe such
rules and issue such guidance as may be necessary to
carry out, enforce, and compile data pursuant to this
section.
(2) Exceptions.--The Bureau, by rule or order, may
adopt exceptions to any requirement of this section and
may, conditionally or unconditionally, exempt any
financial institution or class of financial
institutions from the requirements of this section, as
the Bureau deems necessary or appropriate to carry out
the purposes of this section.
(3) Guidance.--The Bureau shall issue guidance
designed to facilitate compliance with the requirements
of this section, including assisting financial
institutions in working with applicants to determine
whether the applicants are women-owned, minority-owned,
or small businesses for purposes of this section.
(4) Compliance with covered rule.--
(A) In general.--With respect to the covered
rule, the Bureau shall provide a financial
institution a 3-year period beginning on the
date the covered rule was issued to comply with
the rule.
(B) Safe harbor.--After the end of the 3-year
period described under subparagraph (A), the
Bureau shall provide a 2-year safe harbor to a
financial institution during which the
financial institution is required to comply
with the covered rule but is not subject to any
penalties for failure to comply with the
covered rule.
(C) Covered rule defined.--In this paragraph,
the term ``covered rule'' means the final rule
of the Bureau titled ``Small Business Lending
Under the Equal Credit Opportunity Act
(Regulation B)'' (88 Fed. Reg. 35150, published
May 31, 2023).
(h) Definitions.--For purposes of this section, the following
definitions shall apply:
[(1) Financial institution.--The term ``financial
institution'' means any partnership, company,
corporation, association (incorporated or
unincorporated), trust, estate, cooperative
organization, or other entity that engages in any
financial activity.
[(2) Small business.--The term ``small business'' has
the same meaning as the term ``small business concern''
in section 3 of the Small Business Act (15 U.S.C.
632).]
(1) Financial institution.--The term ``financial
institution'' means--
(A) any partnership, company, corporation,
association (incorporated or unincorporated),
trust, estate, cooperative organization, or
other entity that engages in any financial
activity; and
(B) in each of the previous 2 calendar years
originated not less than 500 credit
transactions for small businesses.
(2) Small business.--The term ``small business''
means any entity with gross annual revenues of
$1,000,000 or less in the most recently completed
fiscal year.
(3) Small business loan.--The term ``small business
loan'' means a loan made to a small business.
(4) Minority.--The term ``minority'' has the same
meaning as in section 1204(c)(3) of the Financial
Institutions Reform, Recovery, and Enforcement Act of
1989.
(5) Minority-owned business.--The term ``minority-
owned business'' means a business--
(A) more than 50 percent of the ownership or
control of which is held by 1 or more minority
individuals; and
(B) more than 50 percent of the net profit or
loss of which accrues to 1 or more minority
individuals.
(6) Women-owned business.--The term ``women-owned
business'' means a business--
(A) more than 50 percent of the ownership or
control of which is held by 1 or more women;
and
(B) more than 50 percent of the net profit or
loss of which accrues to 1 or more women.
* * * * * * *
----------
CONSUMER FINANCIAL PROTECTION ACT OF 2010
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Dodd-Frank
Wall Street Reform and Consumer Protection Act''.
(b) Table of Contents.--The table of contents for this Act is
as follows:
Sec. 1. Short title; table of contents.
* * * * * * *
TITLE X--BUREAU OF CONSUMER FINANCIAL PROTECTION
* * * * * * *
Subtitle B--General Powers of the Bureau
* * * * * * *
Sec. 1029B. Examination period limitations,.
* * * * * * *
TITLE X--BUREAU OF CONSUMER FINANCIAL PROTECTION
* * * * * * *
Subtitle B--General Powers of the Bureau
* * * * * * *
SEC. 1029B. EXAMINATION PERIOD LIMITATIONS.
(a) In General.--When enforcing Federal consumer financial
laws, the Bureau may not seek a civil money penalty for any
violation that occurred prior to the most recent assignment of
a consumer compliance rating that had not been identified in
writing as a material finding or supervisory concern at the
time the rating was assigned.
(b) Exception in Cases of Fraud or a Material
Misrepresentation.--Subsection (a) shall not apply to a
violation that involved fraud or a material misrepresentation.
(c) Rule of Construction.--The limitation described in
subsection (a) may not be construed to restrict the ability of
the Bureau to seek other forms of legal or equitable relief
available under subparagraphs (A) through (G) of section
1055(a)(2).
Subtitle C--Specific Bureau Authorities
SEC. 1031. PROHIBITING UNFAIR, DECEPTIVE, OR ABUSIVE ACTS OR PRACTICES.
(a) In General.--The Bureau may take any action authorized
under subtitle E to prevent a covered person or service
provider from committing or engaging in an unfair, deceptive,
or abusive act or practice under Federal law in connection with
any transaction with a consumer for a consumer financial
product or service, or the offering of a consumer financial
product or service.
[(b) Rulemaking.--The Bureau may prescribe rules applicable
to a covered person or service provider identifying as unlawful
unfair, deceptive, or abusive acts or practices in connection
with any transaction with a consumer for a consumer financial
product or service, or the offering of a consumer financial
product or service. Rules under this section may include
requirements for the purpose of preventing such acts or
practices.]
(b) Rulemaking.--
(1) In general.--The Bureau may prescribe rules
applicable to a covered person or service provider
identifying as unlawful unfair, deceptive, or abusive
acts or practices in connection with any transaction
with a consumer for a consumer financial product or
service, or the offering of a consumer financial
product or service. Rules under this section may
include requirements for the purpose of preventing such
acts or practices.
(2) Cost-benefit analysis required.--Any final rule
issued by the Bureau relating to abusive, unfair, or
deceptive acts or practices shall include a cost-
benefit analysis.
(3) Definition of abusive act or practice.--The
Bureau shall, not later than 180 days after the date of
the enactment of this subsection, issue a rule that
defines the term ``abusive act or practice'' for the
purposes of this section.
(c) Unfairness.--
(1) In general.--The Bureau shall have no authority
under this section to declare an act or practice in
connection with a transaction with a consumer for a
consumer financial product or service, or the offering
of a consumer financial product or service, to be
unlawful on the grounds that such act or practice is
unfair, unless the Bureau has a reasonable basis to
conclude that--
(A) the act or practice causes or is likely
to cause substantial injury to consumers which
is not reasonably avoidable by consumers; and
(B) such substantial injury is not outweighed
by countervailing benefits to consumers or to
competition.
(2) Consideration of public policies.--In determining
whether an act or practice is unfair, the Bureau may
consider established public policies as evidence to be
considered with all other evidence. Such public policy
considerations may not serve as a primary basis for
such determination.
[(d) Abusive.--The Bureau shall have no authority under this
section to declare an act or practice abusive in connection
with the provision of a consumer financial product or service,
unless the act or practice--
[(1) materially interferes with the ability of a
consumer to understand a term or condition of a
consumer financial product or service; or
[(2) takes unreasonable advantage of--
[(A) a lack of understanding on the part of
the consumer of the material risks, costs, or
conditions of the product or service;
[(B) the inability of the consumer to protect
the interests of the consumer in selecting or
using a consumer financial product or service;
or
[(C) the reasonable reliance by the consumer
on a covered person to act in the interests of
the consumer.]
(d) Abusive.--
(1) In general.--The Bureau shall have no authority
under this section to declare an act or practice of a
covered person abusive in connection with the provision
of a consumer financial product or service, unless the
act or practice--
(A) intentionally and materially interferes
with the ability of a consumer to understand a
term or condition of a consumer financial
product or service; or
(B) takes unreasonable advantage of--
(i) a lack of understanding by the
consumer with respect to the possible
impact, material risks, costs, or
conditions of the product or service,
or the likelihood of the risks, costs,
or conditions of the product or service
negatively affecting the consumer; and
(ii) the reasonable reliance the
consumer places on an affirmative
action or representation of such
covered person to induce such consumer
to rely on such action or
representation.
(2) Abusive actions.--An act or practice shall not be
considered abusive if the act or practice--
(A) is also unfair or deceptive; or
(B) is otherwise prohibited by Federal
consumer financial law.
(e) Good-Faith Effort To Comply.--
(1) In general.--The Bureau may not seek monetary
relief from a covered person under this section unless
the covered person has not established by a
preponderance of the evidence that they made a good-
faith effort to comply.
(2) Authority to seek legal or equitable remedies.--
The limitation described in paragraph (1) shall not
restrict the authority of the Bureau to seek legal or
equitable remedies, such as damages and restitution, to
redress an identifiable consumer injury caused by the
abusive acts or practices of such covered person.
[(e)] (f) Consultation.--In prescribing rules under this
section, the Bureau shall consult with the Federal banking
agencies, or other Federal agencies, as appropriate, concerning
the consistency of the proposed rule with prudential, market,
or systemic objectives administered by such agencies.
[(f)] (g) Consideration of Seasonal Income.--The rules of the
Bureau under this section shall provide, with respect to an
extension of credit secured by residential real estate or a
dwelling, if documented income of the borrower, including
income from a small business, is a repayment source for an
extension of credit secured by residential real estate or a
dwelling, the creditor may consider the seasonality and
irregularity of such income in the underwriting of and
scheduling of payments for such credit.
(h) Authority To Declare an Act Unlawful Based on
Discrimination or Service as Government Contractor.--The Bureau
may not interpret the authority of the Bureau relating to
unfair, deceptive, or abusive acts and practices to include--
(1) discriminatory practices; or
(2) acts or practices by a covered person performing
the acts or practices pursuant to a contract with a
Federal agency (as defined under section 701(b) of
title 5, United States Code).
(i) Notice and Opportunity To Cure.--
(1) In general.--If a covered person self-identifies
a potential unfair, deceptive, or abusive act or
practice carried out by such covered person, the Bureau
shall, not later than 90 days after such self-
identification, provide a written notice in the form of
a potential action and request for response letter or a
notice and opportunity to respond and advise letter of
the potential unfair, deceptive, or abusive act or
practice to such covered person and inform the covered
person that such person has 180 days after the date the
covered person receives such notice to cure such
potential unfair, deceptive, or abusive act before the
Bureau may pursue other legal action.
(2) Tolling of statute of limitations.--Any
applicable statute of limitations that applies to
conduct under which the Bureau has given notice and an
opportunity to cure shall not toll until--
(A) the covered person cures the potential
unfair, deceptive, or abusive act or practice
and notifies the Bureau that such act or
practice has been cured;
(B) the covered person notifies the Bureau
that such covered person will not cure the act
or practice; or
(C) the 180-day period to cure ends.
(j) Unfair, Deceptive, or Abusive Acts or Practices
Enforcement Actions.--Enforcement actions brought by the Bureau
under this section shall be brought in--
(1) the United States district court located where
the covered person has its headquarters location; or
(2) the United States District Court for the District
of Columbia.
(k) Enforcement Actions.--
(1) In general.--If the Bureau brings an enforcement
action under this section, the Bureau shall state with
particularity the circumstances that the Bureau alleges
constitute a violation of this section.
(2) Alternative claims.--If the Bureau brings an
enforcement action under this section--
(A) claiming that an activity is unfair or
deceptive, the Bureau may not claim in the
alternative that the activity is abusive; and
(B) claiming that an activity is abusive, the
Bureau may not claim in the alternative that
the activity is unfair or deceptive.
* * * * * * *
Subtitle E--Enforcement Powers
* * * * * * *
SEC. 1055. RELIEF AVAILABLE.
(a) Administrative Proceedings or Court Actions.--
(1) Jurisdiction.--The court (or the Bureau, as the
case may be) in an action or adjudication proceeding
brought under Federal consumer financial law, shall
have jurisdiction to grant any appropriate legal or
equitable relief with respect to a violation of Federal
consumer financial law, including a violation of a rule
or order prescribed under a Federal consumer financial
law.
(2) Relief.--Relief under this section may include,
without limitation--
(A) rescission or reformation of contracts;
(B) refund of moneys or return of real
property;
(C) restitution;
(D) disgorgement or compensation for unjust
enrichment;
(E) payment of damages or other monetary
relief;
(F) public notification regarding the
violation, including the costs of notification;
(G) limits on the activities or functions of
the person; and
(H) civil money penalties, as set forth more
fully in subsection (c).
(3) No exemplary or punitive damages.--Nothing in
this subsection shall be construed as authorizing the
imposition of exemplary or punitive damages.
(b) Recovery of Costs.--In any action brought by the Bureau,
a State attorney general, or any State regulator to enforce any
Federal consumer financial law, the Bureau, the State attorney
general, or the State regulator may recover its costs in
connection with prosecuting such action if the Bureau, the
State attorney general, or the State regulator is the
prevailing party in the action.
(c) Civil Money Penalty in Court and Administrative
Actions.--
(1) In general.--Any person that violates, through
any act or omission, any provision of Federal consumer
financial law shall forfeit and pay a civil penalty
pursuant to this subsection.
(2) Penalty amounts.--
(A) First tier.--For any violation of a law,
rule, or final order or condition imposed in
writing by the Bureau, a civil penalty may not
exceed $5,000 for each day during which such
violation or failure to pay continues.
(B) Second tier.--Notwithstanding paragraph
(A), for any person that recklessly engages in
a violation of a Federal consumer financial
law, a civil penalty may not exceed $25,000 for
each day during which such violation continues.
(C) Third tier.--Notwithstanding
subparagraphs (A) and (B), for any person that
knowingly violates a Federal consumer financial
law, a civil penalty may not exceed $1,000,000
for each day during which such violation
continues.
(3) Mitigating factors.--In determining the amount of
any penalty assessed under paragraph (2), the Bureau or
the court shall take into account the appropriateness
of the penalty with respect to--
(A) the size of financial resources and good
faith of the person charged;
(B) the gravity of the violation or failure
to pay;
(C) the severity of the risks to or losses of
the consumer, which may take into account the
number of products or services sold or
provided;
(D) the history of previous violations; and
(E) such other matters as justice may
require.
(4) Authority to modify or remit penalty.--The Bureau
may compromise, modify, or remit any penalty which may
be assessed or had already been assessed under
paragraph (2). The amount of such penalty, when finally
determined, shall be exclusive of any sums owed by the
person to the United States in connection with the
costs of the proceeding, and may be deducted from any
sums owing by the United States to the person charged.
(5) Notice and hearing.--No civil penalty may be
assessed under this subsection with respect to a
violation of any Federal consumer financial law,
unless--
(A) the Bureau gives notice and an
opportunity for a hearing to the person accused
of the violation; or
(B) the appropriate court has ordered such
assessment and entered judgment in favor of the
Bureau.
(6) Rulemaking.--The Bureau shall, not later than 180
days after the date of the enactment of this paragraph,
issue a rule that establishes policies and procedures
relating to the imposition of civil monetary penalties
sought under this subsection, including the application
of the mitigating factors described in paragraph (3).
* * * * * * *
MINORITY VIEWS
This bill is a compilation of four bills designed to weaken
the functioning of the Consumer Financial Protection Bureau
(CFPB), undermine long standing consumer protections, and
reduce transparency in the small business lending market.
Starting with small businesses, this bill would grant
exemptions from the CFPB's requirement for lenders to report
small business lending data, reducing transparency in the small
business lending market and making it harder to detect
discrimination. This bill will undoubtably prevent agencies
from effectively responding to small business lending needs.
As it relates to consumers, this would narrow the scope of
a key consumer protection provision in Dodd-Frank that
prohibits unfair, deceptive, or abusive acts or practices
(UDAAP). Under the bill, the CFPB would be prohibited from
defining discriminatory practices as a UDAAP violation, despite
discrimination being inherently unfair and harmful, hindering
the CFPB's enforcement powers and making it harder for our
consumer watchdog to go after bad actors. Additionally, this
bill would hamper CFPB's ability to quickly remove things that
may have unintentionally been published, which would likely
make it harder for the agency to promote data privacy. Similar
rules, such as the Home Mortgage Disclosure Act (HMDA), do not
require modifications/deletion changes to be made through
notice and comment rulemaking. Overall, this bill would make it
difficult to act quickly if any unanticipated risks to borrower
privacy arose.
Lastly, this bill amends the Truth in Lending Act (TILA) to
provide an expansive safe harbor for a bank, credit union, or
any third-party institution a bank or credit union may partner
with--like a payday lender--that offers small dollar credit
products of less than $3,500 that meet certain conditions. This
bill creates sweeping loopholes that bad actors can exploit,
leaving consumers vulnerable to predatory lending and
discriminatory treatment. Specifically, this bill gives many
lenders broad immunity from civil penalties and other
enforcement for violating a wide range of consumer protection
laws, including the Truth in Lending Act, the Fair Credit
Reporting Act, the Equal Credit Opportunity Act, and the Fair
Debt Collection Practices Act, among many others.
Committee Democrats offered several amendments to attempt
fix the bill, though our amendments were rejected. This
includes an amendment by Rep. Sylvia Garcia (D-TX), which would
amend title II to say nothing in this title will prevent the
CFPB from enforcing UDAAP, as authorized under Dodd-Frank, for
women seeking reproductive health care. Furthermore, Ranking
Member Maxine Waters (D-CA) offered an amendment to require
CFPB to study and certify within 6 months that these changes
will not result in consumer harm or discrimination by financial
institutions covered by this Act, otherwise the Act would not
take effect. Perhaps knowing H.R. 8338 would indeed undermine
consumer protections to the benefit of financial institutions,
Republicans rejected this amendment.
Overall, H.R. 8338 sacrifices consumer protections in favor
of industry interests, creating a regulatory environment that
prioritizes profits over people. A number of consumer groups
oppose this bill, including American Association for Justice,
Americans for Financial Reform, Center for Responsible Lending,
Consumer Federation of America, and National Consumer Law
Center (on behalf of its low-income clients).
For these reasons, we oppose H.R. 8338.
Sincerely,
Maxine Waters,
Ranking Member.
Nydia M. Velazquez,
Stephen F. Lynch,
Emanuel Cleaver, II,
Joyce Beatty,
Brad Sherman,
Al Green,
Ranking Member, Subcommittee
on Oversight and
Investigations.
Bill Foster,
Juan Vargas,
Sean Casten,
Rashida Tlaib,
Nikema Williams,
Ayanna Pressley,
Sylvia R. Garcia,
Members of Congress.
[all]