WASHINGTON, D.C. — The Committee on Small Business, led by Chairman Sam Graves (R-MO), today held a hearing titled, Know Before You Regulate: The Impact of CFPB Regulations on Small Business. Director Richard Cordray of the Consumer Financial Protection Bureau (CFPB) testified about this new Bureau’s regulatory process, and its impact on small business.
The Committee specifically evaluated the Bureau’s proposed rule – 1,100 pages long – on mortgage disclosures and its effect on consumers and small businesses, such as community banks, credit unions, mortgage brokers, mortgage companies and settlement agents. This rule is expected to impact 26,000 small business lenders, mortgage brokers and settlement agents.
The Committee emphasized the need for compliance with the Regulatory Flexibility Act (RFA). Congress intended this important act to protect small firms by requiring federal agencies to evaluate the impacts of regulations on small business. If a new regulation causes significant impact on a substantial number of small businesses, the federal agency must consider less burdensome alternatives. The CFPB is one of three federal agencies required to convene small business panels for input on its rulemaking under the RFA. Created by the Dodd-Frank Wall Street Reform and Consumer Protection Act to regulate consumer protection, the CFPB began operation on July 21, 2011.
“Creating a new bureaucracy is rarely the solution, and too often part of the problem,” said Chairman Graves. “This is a new bureau with enough regulatory latitude to cause concern for many Members of this Committee. We hope to see the Bureau emphasize the preservation of small businesses right from the start of their operations.”
“Small businesses are often victims of unintended consequences of regulations. In turn, consumers lose choices when small firms cut back,” Graves continued. “Since small firms have fewer resources to comply with ever-changing complex rules, the process must protect them better. Now is the time, as the Bureau develops, to make the economic impact on small firms a top priority. If agencies follow the Regulatory Flexibility Act, job creators will have some protection from sudden new regulatory burdens that could put small entities out of business.”
Materials for the hearing are posted on the House Small Business Committee’s website HERE.