Ed's Blog

UPDATED: The Reins Act (HR 427) passed the House today on a near-party line (243-165) vote (see below for discussion, Public Interest Vote = NOE).

Orginal post:

In the House Financial Services Committee today:

Today at 2pm, the House Financial Services Committee takes up a package of bills, many of which are opposed by Americans for Financial Reform and the PIRGs. While none of the bills rises to the level of repealing the Dodd-Frank Act or crippling the CFPB (these bills coming soon, unfortunately), many are extremely problematic. We've specifically added our name to some of the letters opposing specific bills, but share AFR's views on the others it takes a position on (link to cover letter for hearing and list of a number of additional bill-specific sign-on letters). Here are highlights regarding a few of the most problematic bills:

  • -- HR 1737, “Reforming CFPB Indirect Auto Financing Guidance Act.” Car dealers are unhappy that Congress gave the CFPB authority over auto financing. The bill imposes restrictions designed to chill the agency’s attempts to bring fairness and transparency to the auto lending market. Both CFPB and the Department of Justice have taken recent regulatory actions --involving lenders Ally, Evergreen and Honda -- designed to limit illegal and discriminatory interest rate markups in auto finance. The bureau should not have its authority to issue industry-wide guidances, a basic tool of regulators, eliminated in this way.
  • -- H.R. 766, the Financial Institution Customer Protection Act of 2015  is yet another attempt to restrict the Department of Justice’s Operation Choke Point or bank regulator efforts to prevent money laundering and payment system fraud. Worse, it uses a bludgeon approach, by attacking the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), a 25-year old law enacted after the late 1980s savings-and-loan law scandal most famously characterized by the Lincoln Savings and Loan CEO Charles Keating's targeting of the "meek and ignorant" for shoddy investments. The bill before the House would amend FIRREA to eliminate penalties for and investigative authority into unlawful conduct “affecting” federally insured financial institutions. Instead, agencies could only penalize or investigate illegal conduct “against” a financial institution or “by” the institution against a third party. In other words, DOJ could not use FIRREA authority to look into signs that a bank is knowingly helping scammers to take money out of the accounts of seniors, because the scammers are not targeting the bank and the bank is not targeting the senior.

Meanwhile, over on the House floor:

The House will, today or tomorrow, take up the REINS Act. Fortunately, the President has promised a veto.

The Regulations from the Executive In Need of Scrutiny (REINS) Act (HR 427) is not as cute as its name. It more accurately should be called the Godzilla of all anti-health and safety bills. The REINS Act would require that both the House and Senate first approve any major agency regulation or it never takes effect. The idea has been around for years, but fortunately never gained any traction in the Senate. Fortunately, the White House has issued a "Statement of Administration Policy" containing a strong veto threat:

"This radical departure from the longstanding separation of powers between the Executive and Legislative branches would delay and, in many cases, thwart implementation of statutory mandates and execution of duly-enacted laws, create business uncertainty, undermine much-needed protections of the American public, and cause unnecessary confusion. There is no justification for such an unprecedented requirement. When a Federal agency promulgates a major rule, it must already adhere to the particular requirements of the statute that it is implementing and to the constraints imposed by other Federal statutes and the Constitution. Indeed, in many cases, the Congress has mandated that the agency issue the particular rule."

Proponents of REINS and a number of similar, redundant bills being pushed by a coalition led by the Chamber of Commerce that alleges agencies are running amok and crippling businesses with red tape. But as the presidential SAP continues:

"In addition, this Administration has already taken numerous steps to reduce regulatory costs and to ensure that all major regulations are designed to maximize net benefits to society. Executive Order 13563 requires careful cost-benefit analysis, public participation, harmonization of rulemaking across agencies, flexible regulatory approaches, and a regulatory retrospective review. In addition, Executive Order 13610 further institutionalizes retrospective review by requiring agencies to report regularly on the ways in which they are identifying and reducing the burden of existing regulations. Finally, agency rules are subject to the jurisdiction of Federal courts."

So, in case you wen't keeping score, now you know what's happening in Washington this week.

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