Reps. Luetkemeyer, Neugebauer Stand For Consumers By Reining In And Reforming CFPB

Dean Chambers

Standing up for the interests of consumers, Reps. Blake Luetkemeyer (R-MO) and Randy Neugebauer (R-TX) have introduced legislation to shut down Operation Choke Point and reform the Consumer Financial Protection Bureau (CFPB), respectively.

Following the financial crisis of the late 2000s, the Democrat-controlled Congress of 2009-2010 enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act that was signed into law in July of 2010 by President Barack Obama, leading to significant new regulations on the financial services industry. Dodd-Frank also led to the Justice Department carrying out Operation Choke Point, an effort to stop certain industries from accessing banking services, and the creation of CFPB to further regulate financial services. The small-dollar lending industry became a target of both of them.

While it may not have been an intended target of Operation Choke Point, which the Obama Administration says was an effort to root out fraudulent use of banking services, a new report released by the Huffington Post reveals that internet-based payday lenders did get the attention of the operation. Operation Choke Point only led to three prosecutions for involvement in "mass-market fraud schemes," the Huffington Post reported.

"Some emails also corroborated that certain attorneys in the CPB working on Operation Choke Point may have viewed Internet payday lending in a negative light," the Huffington Post quoted from the report.

The efforts to strictly regulate the small-dollar lending industry could put the majority of these lending services out of business, the theInquisitr reported. New regulations limiting how such lenders can offer "payday" loans and similar products, as well as limits on finance fees they can charge, could force most providers of such loans services out of business, limiting the credit options available for tens of millions of consumers.

Rep. Luetkemeyer has introduced H.R. 4986 – End Operation Choke Point Act of 2014 that would stop Operation Choke Point, which has been criticized for unduly restricting the access of certain industries from using banking services. This legislation would also prevent Operation Choke Point from being carried out under the CFPB, which receives its budget from the Federal Reserve and therefore is not controlled by Congress.

Rep. Neugebauer, with the support of Rep. Luetkemeyer, has also introduced H.R. 1266 to reform the CFPB and replace its director leadership with a bipartisan presidential appointed commission. This reform would place the CFPB, an agency that critics say has gone "rogue" and is going far beyond its intended purpose, under the control of a bipartisan commission that would quite likely rein in the new agency and force it to regulate financial services in a more moderate and balanced manner.

Writing for the Blaze, Edward Woodson says the Dodd-Frank legislation has created a "Frankenstein Bureau," in reference to CFPB.

"That agency, the Consumer Financial Protection Bureau (CFPB), has morphed into a monstrosity, staking and harming the people it was intended to help," Woodson writes. "Designed deliberately to be shielded from the democratic process the bureau was placed beyond the reach of congressional oversight. Critics warned that would give bureaucrats unmitigated and unprecedented power to create government red tape with little recourse or ability to reign in overreach and abuse."

Woodson points out how more than 20 percent, according to the federal government, are "underbanked" and in turn choose options like payday loans and other services from small-dollar lenders to meet their credit needs, which could all be eliminated under the draconian regulations proposed by CFPB.

"In a stunning display of arrogance, the CFPB has proposed new regulations eliminating the middle class' ability to obtain short-term credit. This action will not help anybody except the local loan shark," Woodson writes.

Writing a guest op-ed column in USA Today, Rep. Luetkemeyer agrees with this assessment, contending that CFPB is "making credit hard to come by, and making it harder for businesses to expand and hire."

"We continue to hear about the many American families who live paycheck to paycheck and have limited access to credit," Luetkemeyer writes. "Yet the Consumer Financial Protection Bureau and the Obama administration continue to attack financial institutions, further limiting a consumer's ability to access credit."

Luetkemeyer, a former bank examiner himself, says the regulations from CFPB make credit harder to obtain, limiting the ability of businesses to borrow money, hire employees and expand their offering of products and services to consumers. He points out that placing what CFPB views as "consumer protection" about the safety and soundness of financial institutions puts the public at risk.

"CFPB is part of the problem, not the solution, when it comes to creating an environment in which our small businesses can succeed and consumers are actually protected. We must guard against a bureaucracy more focused on scoring political points than solving the underlying problems of our financial system," Luetkemeyer writes in conclusion.

Reps. Luetkemeyer and Neugebauer believe their legislative efforts will bring about a more balanced approach to regulating the financial services industry without destroying the sources of credit used by individuals and small businesses.

[Photo of Rep. Blake Luetkemeyer by Bill Clark for Getty Images]