Letter to Congress: Support amendments to strike anti-consumer riders in House appropriations bill

Dear Representative,

On behalf of Americans for Financial Reform, we are writing to express our opposition to the the appropriations bill for Financial Services and General Government (FSGG) to be considered by the House as Division D of H.R. 3354. Titles IX of Division D consists of more than 80 pages of policy riders drawn from the Financial Choice Act, a radical and highly controversial bill that would eviscerate financial oversight in numerous areas. In addition to opposing the bill as a whole, we urge yes votes on amendments to remove these harmful policy riders:

  • Amendment #201 (Ellison), to strike a provision eliminating entirely the authority of the Consumer Financial Protection Bureau (CFPB) to prevent abuses in payday and car title lending, either by writing new rules or enforcing existing law. If this provision were adopted, payday loans would have fewer federal protections than any other consumer finance product, despite the extraordinary harm they cause to consumers. The typical interest rate of a payday loan is 391% APR, and payday lenders make 75% of their profits off of consumers who rollover 10 loans or more. Because payday lenders collect directly from a borrower’s bank account, payday lenders can remain profitable even when borrower’s cannot afford to repay them without defaulting on other financial obligations. The CFPB should retain authority to protect consumers against abusive practices by payday lenders.

  • Amendment #199 (Ellison), and Amendment #221 (Amodei / Aguilar) to preserve the independence of the CFPB and National Credit Union Administration (NCUA), respectively, by striking provisions that would eliminate their dedicated funding. The long-standing practice of independent funding for regulators of financial institutions helps to shield those agency from the political pressures that can be brought to bear by well-funded financial interests through the appropriations process.

  • Amendment #200 (Ellison), to strike a rider to eliminate consumer protections for home-buyers who borrow to purchase manufactured housing, including by permitting higher interest rates in this market before basic consumer protections applied. These loans are generally made to lower income people, and there is a record of both past and recent abuses in this market, making this push to remove protections particularly unwise.

Even if these amendments were adopted, the remaining provisions of Title IX and Title X of the bill would still represent an extraordinary level of abuse of the appropriations process to advance unrelated policy goals. These titles make up over one-third of the entire length of the FSGG appropriations bill, and is completely devoted to deregulating Wall Street and the consumer finance markets. The material in Title IX includes:

  • A measure that repeals the Volcker Rule, a crucial part of the Dodd-Frank Act that bans regulated banks from engaging in hedge-fund like speculation for their own accounts.

  • Provisions that strip away key powers of the Consumer Financial Protection Bureau, including its bank supervisory powers and its power to crack down on unfair, deceptive, and abusive acts and practices in consumer finance.

  • Provisions that reverse key CFPB rules protecting consumers, including eliminating a CFPB rule to limit forced arbitration clauses in consumer finance, thus blocking consumers from accessing the courts if they are wronged and undermining CFPB protections for mortgage lending.

  • A section that eliminates the ability of the Financial Stability Oversight Council to designate giant non-bank financial institutions for enhanced prudential oversight.

  • Provisions that radically weaken the Federal Reserve’s ability to effectively stress test large Wall Street banks to determine if they have adequate private capital to withstand an economic downturn without a taxpayer bailout.

  • Multiple provisions that reverse long-standing precedent by ending the independent funding of bank regulators, including the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Federal Reserve (in addition to CFPB and NCUA, as discussed above). This opens these regulators to increased pressure from the powerful industries they oversee.

This list hardly exhausts the objectionable policy riders in Title IX, which contains numerous other provisions weakening investor and consumer protections. Outside of Title IX, there are also a number of other inappropriate and dangerous policy riders in this bill. These include Title X of FSGG which would create a dangerously impractical financial bankruptcy procedure that gives special privileges to large financial institutions, eliminating the authority of the Securities and Exchange Commission to require disclosure of political spending, and riders affecting other areas outside of financial regulation.

The provisions described above stand out as a particularly broad and brazen attempt to use the appropriations process to push through far-reaching policy changes that serve the narrow interests of Wall Street and of abusive lenders. These changes would do tremendous harm to the public, both by increasing the risk of another devastating financial crisis, and making it easier for Wall Street banks to rip off their customers.

It is an inappropriate to attempt to force radical deregulation of Wall Street through a funding bill. We urge members of the House to vote for amendments to strip ideological policy riders from the appropriations bill, and to oppose the bill.


Americans for Financial Reform