Banking and Finance Law Daily Wrap Up, CONSUMER FINANCIAL PROTECTION BUREAU—Groups ask House panel to reject proposed CFPB reform bill, (Aug 24, 2026)

By Nora Macaluso

A letter to the House Financial Services Committee says proposed legislation would severely limit the CFPB’s ability to fulfill its mission.

National and state consumer, community, and civil rights groups urged the House Financial Services Committee to reject a bill aimed at overhauling the Consumer Financial Protection Bureau, saying the legislation would kneecap the agency at a time when its consumer-protection tools are sorely needed. “For the last 15 years, the Consumer Financial Protection Bureau (CFPB) has been the only agency with the sole mission of protecting consumers in the financial markets and has helped stave off another financial crisis by cracking down on harmful practices, unsafe products, and widespread risk caused by patchwork protections,” the groups—including Americans for Financial Reform, Public Citizen, and U.S. PIRG—said in a letter to Reps. French Hill (R-Ark.), the panel’s chairman, and Maxine Waters (D-Calif.), its top Democrat. The proposed legislation, the letter added, would “make the financial market less safe, more complicated, more expensive, and more prone to exactly the type of financial crisis the CFPB was designed to prevent.”

The draft legislation, released in July, would amend the Consumer Financial Protection Act of 2010 and related implementing regulations (see Banking and Finance Law Daily, July 27, 2026). The legislation focuses on increasing congressional oversight, clarifying authority, promoting innovation and predictability, and limiting “regulation by enforcement” of the Bureau. The groups said the draft “would complete the attack on the CFPB already underway to devastating effect.”

The 14-page letter lists specific objections and ways lawmakers could preserve the CFPB’s powers. For one thing, the groups said, Congress should preserve the CFPB’s independent funding, rather than putting it under an appropriations process that would make it vulnerable to shutdowns, budget fights, and “constant threats to the funding it needs.”

They also recommended that, among other things, lawmakers not make changes to the CFPB’s Civil Penalty Fund, making sure it has a sufficient balance and not limiting its protections to people harmed by financial companies; maintain the Bureau’s flexibility to address emerging problems instead of adding “redundant and unnecessary requirements” to the rulemaking process; and reject proposed changes the groups said would limit the CFPB’s ability to take steps to protect consumers.

“Congress created a powerful advocate for consumers when it passed the Dodd-Frank Act—it was designed to develop rules that protect consumers and supervise and enforce consumer financial laws,” said Tara Flynn, policy director for the National Community Reinvestment Coalition, one of the groups signing on to the letter. “The draft legislation adds insult to an already injured CFPB and would weaken every tool in the CFPB’s toolbox for protecting consumers when many are struggling to make ends meet.”

The National Independent Automobile Dealers Association (NIADA) recently endorsed the draft legislation. In a comment letter submitted to the committee, the association also urged Congress to expand the CFPB’s automobile dealer exemption and further restrict the Bureau’s use of enforcement actions to establish regulatory standards (see Banking and Finance Law Daily, Aug. 20, 2026). Insurance groups, meanwhile, pressed for the legislation to clarify limitations on the CFPB's authority, while the Defense Credit Union Council called for the National Credit Union Administration to retain primary authority over credit unions (see Banking and Finance Law Daily, Aug. 21, 2026).

Companies: Americans for Financial Reform; Public Citizen; U.S. PIRG

LegislativeActivity: BankingOperations CFPB ConsumerCredit EnforcementActions Loans OversightInvestigations Privacy PrudentialRegulation UDAAP