While lawmakers from opposing parties either cheered or jeered the vote tally, industry advocates from the banking, financial services and dealership communities on Thursday all applauded the U.S. House of Representatives for passing H.R. 10, the Financial CHOICE Act. 

The measure is a comprehensive financial reform bill that includes what one group called “significant and much-needed reforms” to the Consumer Financial Protection Bureau (CFPB).

The CHOICE Act passed the House by a 233-186 vote with party lines primarily dividing the representatives on this matter, which now will be in the hands of the upper chamber beginning with the U.S. Senate Banking Committee.

In a statement sent to SubPrime Auto Finance News, the American Financial Services Association (AFSA) said it especially congratulates House Financial Services Committee Chairman Jeb Hensarling, a Republican from Texas and all the members who worked on the CHOICE Act for their “hard work and dedication to ensuring that American consumers have access to the credit they need and deserve.”

AFSA continued by stating, “The CHOICE Act would make important strides in reining in the (CFPB) and significantly reducing the regulatory burden placed on financial services by the Dodd-Frank Wall Street Reform and Consumer Protection Act.”

AFSA added that it submitted a letter of support in May and will continue to work with Congress as the bill moves to the Senate.

In another statement sent to SubPrime Auto Finance News, the National Automobile Dealers Association appreciated the House’s actions and those “significant and much-needed reforms” because the organization believes changes will bring relief for consumers facing the prospect of higher costs for financing vehicle purchases.

NADA highlighted the measure’s advancement would nullify the CFPB's guidance on indirect auto financing, which the association said attempted to eliminate a dealer’s ability to discount credit in the showroom. The also requires the bureau to:

— Provide public notice and comment before issuing any additional auto-financing guidance

— Make publicly available all studies, data, methodologies or other information relied upon to produce the guidance

— Study the costs and impacts of the guidance.

NADA also pointed out the CHOICE Act brings the CFPB under the regular congressional appropriations process for the first time, which is another reform NADA has long supported.

“Access to affordable credit is essential to customers and their dealers,” NADA president and chief executive officer Peter Welch said. “Chairman Hensarling, members of the House Financial Services Committee, and the members of Congress who supported H.R. 10 and worked to include these vital consumer protections should be commended for their efforts to keep auto financing affordable and available to consumers everywhere. I look forward to the Senate taking timely actions to help cement these consumer protections into law.”

NADA chairman Mark Scarpelli added, “America’s franchised new-car dealers have always been on the side of our customers, which is why we have so strenuously opposed the CFPB’s anti-consumer guidance that would have raised the cost of car and truck loans, and pushed otherwise-creditworthy customers out of the auto credit market altogether.

“And we will continue to be on the side of our customers by urging Congress to get this legislation across the finish line, and by continuing to promote the voluntary NADA/NAMAD/AIADA Fair Credit Compliance Program that effectively manages fair-credit risk while preserving discounts on credit for consumers,” Scarpelli went on to say.

The measure also has been a primary focus of the National Independent Automobile Dealers Association’s advocacy efforts and was one of NIADA's top legislative priorities as part of its annual Day on the Hill during the National Leadership Conference and Legislative Summit in Washington D.C. last September.

“NIADA and its members have long advocated for the need to reform the over-burdensome regulatory framework created by the Dodd-Frank Act, including the unaccountability and overreach of the Consumer Financial Protection Bureau,” NIADA chief executive officer Steve Jordan said.

“We applaud the efforts of the House of Representatives, especially Chairman Hensarling, to bring about these necessary changes. We look forward to working with lawmakers in the Senate to move the bill forward,” Jordan went on to say.

More upbeat assessments of Thursday’s developments came from the banking world, too. Rob Nichols is president and CEO of the American Bankers Association.

“(Thursday’s) House vote is an important step toward making much-needed regulatory reforms that will allow banks to better serve their customers and communities.  We applaud Chairman Hensarling and members of the House Financial Services Committee for their continuing efforts to fix financial rules that are holding back the U.S. economy, and doing little to enhance safety and soundness. We look forward to working with lawmakers in the House and Senate as this process moves forward,” Nichols said.

“While the Financial CHOICE Act contains a number of reforms ABA members have long supported, it would have been much stronger had a provision to repeal the Durbin Amendment been retained in the bill.  We will continue to let lawmakers know that a vote to keep the Durbin Amendment on the books is a vote for government price controls and against consumers,” Nichols continued.

Consumer Bankers Association president and CEO Richard Hunt also was glad the measure passed in the House, but he reiterated his concerns about the matter, as well.

“We appreciate the House of Representatives’ effort to provide regulatory reform via the Financial CHOICE Act and thank House Financial Services Committee Chairman Jeb Hensarling for remaining committed to making relief a priority. We also appreciate the reforms the CHOICE Act made to section 1071 of the Dodd-Frank Act and to arbitration,” Hunt said. “CBA and its members, who represent the nation’s largest retail banks, still believe any reforms made to the CFPB should begin with the restructuring of the bureau’s leadership.

“In order to provide balance and stability to consumers and the economy, the CFPB should be led by a five-person bipartisan commission to ensure it is protected from potential political influence,” Hunt continued. “Congress has support from constituents, as a recent Morning Consult poll we commissioned shows voters prefer a bipartisan commission over a single director by a 3-1 margin.”

“We are hopeful the Senate will now take up financial regulatory reform and strongly urge the consideration of the benefits of a commission at the CFPB. Congress can provide relief by implementing policies geared toward growing the economy and boosting consumer confidence,” Hunt went on to say.

Lawmaker reaction

Not surprisingly, Hensarling was quite pleased with Thursday’s outcome since he’s been pushing the Financial CHOICE Act for more than a year.

“Every promise of Dodd-Frank has been broken,” Hensarling said. “Fortunately there is a better, smarter way. It’s called the Financial CHOICE Act.  It stands for economic growth for all, but bank bailouts for none. We will end bank bailouts once and for all. We will replace bailouts with bankruptcy. We will replace economic stagnation with a growing, healthy economy.”

“We will make sure there is needed regulatory relief for our small banks and credit unions, because it’s our small banks and credit unions that lend to our small businesses that are the jobs engine of our economy and make sure the American dream is not a pipe dream,” Hensarling added.

Meanwhile, Rep. Maxine Waters, a California Democrat and ranking member of House Financial Services Committee, continued her vehement opposition to this measure.

“It's shameful that Republicans have voted to do the bidding of Wall Street at the expense of Main Street and our economy. They are setting the stage for Wall Street to run amok and cause another financial crisis. I urge my colleagues in the Senate not to move on this deeply harmful bill,” Waters said.

At least one Senate member agrees with Waters. That’s Sen. Sherrod Brown, an Ohio Democrat and ranking member of the Senate Banking Committee. Brown criticized Republicans who “rammed the bill through” the House Financial Services Committee on a party-line vote last month to trigger Thursday’s actions.

“This partisan, dangerous legislation would once again leave families, seniors, and servicemembers at the mercy of predatory lenders, and put taxpayers back on the hook to pay for Wall Street’s greed and recklessness,” Brown said. “Democrats have shown we’re willing to work with Republicans to tailor the rules where it makes sense, but not if it means killing the reforms that have made the financial system safer and fairer.”

During a Senate Banking Committee hearing conducted on the same day as the Financial CHOICE Act passed through the House, Sen. Mike Crapo, an Idaho Republican who chairs the committee, didn’t mention the bill by name, but discussed the topic since the hearing was entitled: “Fostering Economic Growth: The Role of Financial Institutions in Local Communities.”

Crapo cited a Harvard University study that he said, “appropriately described community banking by stating, ‘Their competitive advantage is a knowledge and history of their customers and a willingness to be flexible.’ Unfortunately, the operating landscape facing these institutions has changed dramatically over the last several years.

“The industry has become increasingly concentrated, and that concentration has accelerated since the passage of Dodd-Frank,” Crapo continued. “The regulatory rules dictated from Washington are often contradictory, complex and confusing, and they sharply restrict community lenders’ ability to be flexible.

“I am concerned that in a rush to implement new regulation, regulators have often ignored the cumulative effect of the rules, and that there is a lack of coordination among them,” he went on to say. “We want our nation’s financial institutions to be well-capitalized and well-regulated, but they should not be drowned by unnecessary compliance costs. Financial regulation should promote safety and soundness while enabling a vibrant and growing economy.”

More opposition to House actions

While industry advocates saw passage of the Financial CHOICE Act as a positive development, a host of consumer organization frowned on the development. Here are a couple of examples:

— Vanita Gupta, president and CEO of The Leadership Conference on Civil and Human Rights: “This is the wrong choice act. It’s wrong for consumers, and wrong for our economy. It is nothing more than a repackaging of Republican efforts over the past six years to deregulate the financial services industry, enable payday lending and other predatory services, and unlearn the lessons of the 2008 financial crisis. It is so radical that even President Trump was only willing to endorse it in ‘several key respects.’ The bill would not only undercut the pro-consumer policies issued by the Consumer Financial Protection Bureau — and in the case of payday lending, take away the CFPB’s authority altogether — it would also take away the independence of the CFPB itself, and replace it with political pressure from Congress and well-heeled industries.”

— Yana Miles, senior legislative counsel for The Center for Responsible Lending: “This bill puts big banks and predatory lenders back in charge of our economy. Dodd-Frank and the creation of the Consumer Financial Protection Bureau has created a fairer financial marketplace for consumers and has kept financial institutions accountable to the public. This basic accountability is especially important for low-wealth families and communities of color who were hit hardest by the financial crisis. The Trump Administration’s recent support of this bill contradicts the president’s promise to drain the swamp and protect people from bad financial practices on Wall Street. Instead of giving free passes to loan sharks like payday lenders, Congress and the president should make consumer protection a top priority. CRL and communities across the country — including veterans, faith leaders, consumers and others — will fight the Wrong Choice Act at every turn and continue to stand up for economic justice and inclusivity.”