¶ Anti-CFPB Crusader
Sen. Scott, who has opposed reining predatory loan interest rates, has a long history of opposing the Consumer Financial Protection Bureau. Sen. Scott has claimed the Bureau “lacks transparency” and has signed his name to several bills to undermine the CFPB, including one to strike down a rule making it easier for harmed consumers to sue abusive companies, one to make the Bureau “prioritize” business interest, and another to hobble the CFPB’s independence.
¶ Sen. Scott—Who Has Opposed A National 36% Interest Rate Cap On Consumer Loans—Has Said The Consumer Financial Protection Bureau (CFPB) “‘Lacks Transparency And Seeks To Operate Beyond Its Jurisdiction’” And Opposed A Rule To Help Increase Lending To Small Businesses Owned By Women Or Minorities.
¶ February 2023: Sen. Scott Said, “‘The CFPB Has Long Been An Agency That Lacks Transparency And Seeks To Operate Beyond Its Jurisdiction’” After The Supreme Court Announced It Would Consider The Constitutionality Of The Bureau’s Funding.
February 2023: After The U.S. Supreme Court Announced That It Would Consider A Case On The Constitutionality Of The CFPB’s Funding Structure, Sen. Scott Said, “‘The CFPB Has Long Been An Agency That Lacks Transparency And Seeks To Operate Beyond Its Jurisdiction.’” “U.S. Senate Banking Committee Ranking Member Tim Scott (R-S.C.) released the following statement after the U.S. Supreme Court announced it will consider the decision by the U.S. Court of Appeals for the Fifth Circuit that found the funding structure of the Consumer Protection Financial Bureau (CFPB) to be unconstitutional: ‘The CFPB has long been an agency that lacks transparency and seeks to operate beyond its jurisdiction. I look forward to reviewing the Supreme Court’s decision, when the time comes, and continuing my efforts to hold the CFPB accountable to the American people and Congress.’” [U.S. Senate Committee on Banking, Housing, and Urban Affairs, 02/27/23]
¶ In January 2022, Sen. Scott Joined Rep. William Timmons (R-SC) Writing In Opposition To A CFPB Rule To Increase Data Collection On Lending To Small Businesses Owned By Women Or Minorities—Scott’s Letter Called The Rule “‘Misguided And Ill-Informed.’”
January 2022: Sen. Scott, Along With Rep. William Timmons (R-SC), Wrote To The CFPB Opposing Rulemaking To “Require Covered Financial Institutions To Collect And Report To The CFPB Data On Applications For Credit For Small Businesses, Including Those Owned By Women Or Minorities." "Two South Carolina lawmakers are reaching out to the head of the Consumer Financial Protection Bureau (CFPB) about a new data collection rule that they say would place an undue burden on small business owners, farmers, and lenders. [...] The rule would require covered financial institutions to collect and report to the CFPB data on applications for credit for small businesses, including those owned by women or minorities." [Financial Regulation News, 01/07/22]
- "The Proposed Rule [Was] Called The Small Business Lending Data Collection Under The Equal Credit Opportunity Act (Regulation B). It Would Amend Regulation B To Implement An Amendment To The Equal Credit Opportunity Act Made By Section 1071 Of The Dodd-Frank Act." "The proposed rule is called the Small Business Lending Data Collection Under the Equal Credit Opportunity Act (Regulation B). It would amend Regulation B to implement an amendment to the Equal Credit Opportunity Act made by section 1071 of the Dodd-Frank Act." [Financial Regulation News, 01/07/22]
Scott’s Letter Claimed, "‘We Feel That The CFPB Has Failed To Take The Appropriate Steps To Engage With These Institutions On This Proposed Rule, And By Doing So, We Believe That The Bureau Has Fashioned A Rule That Would Hurt Not Only These Lending Institutions But American Farmers Themselves.’" "We feel that the CFPB has failed to take the appropriate steps to engage with these institutions on this proposed rule, and by doing so, we believe that the Bureau has fashioned a rule that would hurt not only these lending institutions but American farmers themselves." [Financial Regulation News, 01/07/22]
Scott’s Letter Called The CFPB’s Rulemaking “‘Misguided And Ill-Informed.’” “‘In short, we feel that these actions being proposed by the CFPB are misguided and ill-informed, especially considering the challenges that farmers are currently facing due to rising inflation, prolonged supply chain disruptions, and labor shortages. We strongly urge you to change course.’” [Financial Regulation News, 01/07/22]
¶ Tim Scott Has Expressed Opposition To A National 36% Interest Rate Cap, Even Attacking A Federal Reserve Nominee For Her Support Of The Policy.
February 2022: Tim Scott Was Praised By The American Financial Services Association For Attacking Federal Reserve Nominee Sarah Bloom Raskin’s Support For A 36% Interest Rate Cap On Consumer Loans During A Hearing On Her Nomination. “Yesterday, President Biden’s three nominees to serve on the Federal Reserve Board of Governors testified before the Senate Banking Committee on a variety of financial service-related topics, including the ability for consumers to access small-dollar credit. During the hearing, Senator Tim Scott (R-SC) asked Fed nominee Sarah Bloom Raskin why she had previously endorsed legislation to establish a nationwide APR rate cap on all consumer loans, and if she was aware the Federal Reserve published an extensive study indicating a 36% APR rate cap would eliminate the ability for consumers to receive loans of under around $3,000. [...] AFSA applauds Sen. Scott for his continued dedication preserving credit options for hard-working Americans of all economic backgrounds. Sen. Scott released a press release on the testimony following the committee hearing.” [American Financial Services Association, 02/04/22]
In His Questioning, Scott Stated He Was “Opposed To A National APR Rate Cap, Even At 36%, Because It Simply Eliminates An Entire Market Of Small Dollar Loans For People Who Need Access.” “Mrs. Raskin I am opposed to a national APR rate gap, even at 36%, because it simply eliminates an entire market of small dollar loans for people who need access … But your characterization that either you are someone who doesn’t understand low-income Americans, or you are someone who supports the predatory industry...I got to say, I’m not sure which one you would call me: Am I the person who simply doesn’t understand the needs and challenges of low-income Americans, or do you put me in the category of someone who’s just a cheerleader for predatory lenders?” [Senator Tim Scott, 02/03/22]
¶ Sen. Scott Has Cosponsored Several Bills To Undermine The CFPB, Including One To Successfully Strike Down A Rule Making It Easier For Harmed Consumers To Sue Abusive Financial Companies, One To Make The Bureau “Prioritize” Business Interests, And One To Undo The Bureau’s Independent Funding.
¶ In 2017, Sen. Tim Scott Was An Original Cosponsor Of The Senate Version Of A Successful Congressional Review Act Resolution Nullifying The CFPB’s Arbitration Rule In A Move Seen As “The Financial Services Industry's Most Significant Legislative Victory” In 2017 And Criticized As “‘A Giant Setback For Every Consumer In This Country.’”
In July 2017, Sen. Tim Scott Was An Original Cosponsor Of Senate Joint Resolution 47, A Congressional Review Act Resolution Which Sought To Nullify The CFPB’s Rule Regulating Forced Arbitration Agreements. “This joint resolution nullifies a rule submitted by the Consumer Financial Protection Bureau (CFPB) regarding arbitration agreements. (The rule regulates the use of arbitration agreements in contracts for specific consumer financial products and services. It prohibits the use of a predispute arbitration agreement to prevent a consumer from filing or participating in certain class action suits. The rule also requires consumer financial product and service providers to furnish the CFPB with particular information regarding arbitrations.)” [Congress.gov, accessed 01/10/23]
- Sen. Tim Scott Was An Original Cosponsor To S.J. Res. 47. [Congress.gov, accessed 01/10/23]
S.J. Res. 47 Was An Identical Bill To House Joint Resolution 111, Which Passed Congress And Was Signed Into Law By Former President Donald Trump On November 1, 2017. [Congress.gov, accessed 01/10/23]
[Congress.gov, accessed 01/10/23]
- The Joint Resolution Was Signed Into Law On November 1, 2017, Causing The CFPB’s Arbitration Agreements Rule To Have “No Force Or Effect.” “On Nov. 1, 2017, the President signed a joint resolution passed by Congress disapproving the Arbitration Agreements Rule under the Congressional Review Act (CRA). Pursuant to the joint resolution, the Arbitration Agreements Rule has no force or effect. On Nov. 22, 2017, the Bureau published a notice removing the Arbitration Agreements Rule from the Code of Federal Regulations. The materials relating to the Arbitration Agreements Rule on the Bureau’s website are for reference only.” [Consumer Financial Protection Bureau, accessed 01/10/23]
The CFPB’s Final Arbitration Rule Would Have Prohibited Arbitration Agreements From Limiting One’s Ability To Engage In A Class Action Lawsuit, While Also Requiring Companies Involved In An Arbitration Agreement To File Related Records With The Bureau. “First, the final rule prohibits covered providers of certain consumer financial products and services from using an agreement with a consumer that provides for arbitration of any future dispute between the parties to bar the consumer from filing or participating in a class action concerning the covered consumer financial product or service. Second, the final rule requires covered providers that are involved in an arbitration pursuant to a pre-dispute arbitration agreement to submit specified arbitral records to the Bureau and also to submit specified court records.” [Consumer Financial Protection Bureau, accessed 01/10/23]
The Repeal Of The CFPB’s Arbitration Rule Was Seen As “The Financial Services Industry's Most Significant Legislative Victory” In 2017, With Then-CFPB Director Richard Cordray Calling Its Nullification “‘A Giant Setback For Every Consumer In This Country’” And Adding That “‘Companies Like Wells Fargo And Equifax Remain Free To Break The Law Without Fear Of Legal Blowback From Their Customers.’” “The vote late Tuesday caps a fractious fight between the CFPB and the industry in which it was unclear whether Republicans would be able to gather the necessary support in the Senate. It also marks the financial services industry's most significant legislative victory this year. In a statement after the vote, CFPB Director Richard Cordray said the vote was ‘a giant setback for every consumer in this country.’ ‘Wall Street won and ordinary people lost," Cordray said. ‘Companies like Wells Fargo and Equifax remain free to break the law without fear of legal blowback from their customers.’” [American Banker, 10/24/17]
September 14, 2022: In A Letter To CFPB Director Rohit Chopra Calling On The Bureau To Exercise Its Authority To Limit Forced Arbitration Clauses, Over 100 Consumer Advocacy Groups Noted The 2017 Rule “‘Would Have Restored Rights And Leveled The Playing Field For Millions Of Consumers.’” “The CFPB previously promulgated a rule limiting the use of forced arbitration and class action waivers. After the Trump administration took office, a 50-50 Senate vote struck down the rule when former Vice-President Mike Pence broke the tie in favor of allowing big banks to use forced arbitration freely. As the letter explains: ‘The Bureau’s eventual rule in 2017, which prohibited regulated entities from using forced arbitration clauses that bar consumers from enforcing their rights by participating in class or collective actions, would have restored rights and leveled the playing field for millions of consumers. We were exceedingly disappointed that Congress voted by the narrowest of margins to disapprove the rule before it could go into effect. [...] The Bureau can and must exercise its authority in any number of ways that would not be substantially the same as the regulation Congress acted to nullify.’” [National Consumer Law Center, 09/14/22]
The American Bankers Association “Strongly Opposed” The CFPB’s Arbitration Rule And Vowed To “Loo[k] At Every Option To Prevent The Rule From Coming Into Force In Its Current Form.” “The Consumer Financial Protection Bureau on Friday released a small entity compliance guide on the bureau’s final rule drastically constricting the use of mandatory arbitration agreements in consumer financial contracts. [...] The American Bankers Association strongly opposed the rule, noting that it is written to favor the interests of class action trial attorneys over consumers themselves. ABA also supports ongoing efforts in the Senate to pass a resolution disapproving of the rule under the Congressional Review Act. The House passed a disapproval resolution in July. If the Senate passes this measure in the coming weeks and — as expected — President Trump signs it, the final rule will be voided and compliance will not be required. In addition to supporting the congressional process, ABA is looking at every option to prevent the rule from coming into force in its current form.” [ABA Banking Journal, 09/18/17]
¶ Sen. Scott Was An Original Cosponsor Of And Voted For S.J. Res. 57, A Resolution That Successfully Overturned The CFPB’s 2013 Guidance To Fight Auto Lending Discrimination,
Sen. Scott Was An Original Cosponsor Of S.J. Res. 57, A Congressional Review Act Resolution Overturning The CFPB's Indirect Auto Lending Guidance. “This joint resolution nullifies the rule submitted by the Consumer Financial Protection Bureau and printed in the Congressional Record on December 6, 2017, relating to indirect auto lending and compliance with the Equal Credit Opportunity Act. The rule provides guidance for compliance with fair lending requirements for third-party auto lenders.” [Congress.gov, accessed 03/09/23]
- Sen. Scott Voted For S.J. Res. 57. [U.S. Senate, 04/18/18]
- S.J. Res 57 Became Law On May 21, 2018. [Congress.gov, accessed 03/09/23]
The CFPB’s 2013 Indirect Auto Lending Guidance “Put Auto Lenders On Clear Notice That The Equal Credit Opportunity Act (ECOA) Makes Them Liable For Discriminatory Pricing On Auto Loans They Acquire From Auto Dealers.” “The Consumer Bureau’s 2013 indirect auto lending guidance put auto lenders on clear notice that the Equal Credit Opportunity Act (ECOA) makes them liable for discriminatory pricing on auto loans they acquire from auto dealers. ECOA makes it illegal for a creditor to discriminate in any aspect of a credit transaction on the basis of race or other protected bases; indirect auto lenders are creditors under ECOA.” [Center for Responsible Lending, 04/19/18]
Consumer Advocates Opposed S.J. Res. 57, Calling It “The Latest In A Series Of Attempts To Chill Federal Efforts To End Widespread Unlawful Discrimination,” Noting That Auto Lending Discrimination Was “Well-Documented.” “We, the undersigned civil rights and consumer advocacy organizations, ask you to oppose S.J. Res. 57, the Congressional Review Act (CRA), introduced by Senator Jerry Moran (R-KS), intended to undo the Consumer Financial Protection Bureau’s (CFPB or Consumer Bureau) Indirect Auto Lending Guidance, published over five years ago. This resolution is the latest in a series of attempts to chill federal efforts to end widespread unlawful discrimination. Discrimination in the auto lending market is well-documented and results in people of color paying more for years to finance a car purchase. This CRA would also set the dangerous precedent of undoing long-standing federal agency guidance—an expansion of the use of the Congressional Review Act, and certainly beyond its original purpose of narrowly reviewing regulations soon after they were enacted.” [Center for Responsible Lending, 04/19/18]
¶ Sen. Scott—Along With Sens. Rounds And Lummis—Cosponsored the TAILOR Act, Which Would Weaken Regulatory Powers Of Several Agencies And Require Them To "Take Into Consideration The Risk Profiles And Business Models Of Individual Financial Institutions," Among Other Anti-Consumer Provisions.
March 2022: Sen. Scott Joined Senators Rounds And Lummis By Reintroducing The "Taking Account Of Institutions With Low Operation Risk (TAILOR) Act.” "U.S Senators Tim Scott (R-S.C ), Mike Rounds (R-S.D ), and Cynthia Lummis (R-Wyo.), all members of the Senate Committee on Banking, Housing and Urban Affairs, reintroduced the Taking Account of Institutions with Low Operation Risk (TAILOR) Act. This bill would require federal regulatory agencies to take risk profiles and business models of institutions into account when crafting regulations." [Senator Tim Scott, 03/04/22]
The TAILOR Act Would Require Regulatory Agencies, Including The CFPB, "To Take Into Consideration The Risk Profiles And Business Models Of Individual Financial Institutions And Shape Those Regulations Accordingly." "The TAILOR Act would require regulatory agencies, such as the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve, the Federal Deposit Insurance Corporation, the National Credit Union Administration and the Consumer Financial Protection Bureau, to take into consideration the risk profiles and business models of individual financial institutions and shape those regulations accordingly." [Senator Tim Scott, 03/04/22]
Americans For Financial Reform Argued H.R. 1116 Would "Force Regulators To Prioritize The Costs Of Regulations To Financial Institutions." "This sweeping mandate would force regulators to prioritize the costs of regulations to financial institutions over the offsetting benefits to consumers and the general public. The mandate implies that regulators would be unable to act to protect the public if such action led to any significant costs to Wall Street banks." [Americans for Financial Reform, 03/12/18]
¶ Sen. Scott Was An Original Cosponsor Of The Consumer Financial Protection Bureau Accountability Act Of 2021, Which Sought To Undo The Bureau’s Independent Funding Structure Meant To Protect It From Political Fluctuations.
In September 2021, Sen. Tim Scott Cosponsored S. 2790, The Consumer Financial Protection Bureau Accountability Act Of 2021, Which Sought To Remove The CFPB’s Federal Reserve System Funding In Order To Bring It Under The Annual Appropriations Process. “This bill changes the source of funding for the Consumer Financial Protection Bureau (CFPB) from Federal Reserve System transfers to annual appropriations. Under current law, the transfers from the Federal Reserve System permit the CFPB to be funded outside of the annual appropriations process.” [Congress.gov, accessed 01/10/23]
- Sen. Tim Scott Was An Original Cosponsor Of S. 2790. [Congress.gov, accessed 01/10/23]
Sen. Elizabeth Warren (D-MA) Has Noted That The CFPB And Other Bank Regulators Have Independent Funding Structures To Protect Them And Financial Markets From Political Fluctuations. “Senator Warren: So look. There is a good reason why Congress created independent funding structures for bank regulators. Your agencies are the cops on that beat that ensure the safety and stability of the banking system. Your rules provide the guidebook for financial institutions to serve consumers while acting within the law. Congress understood this, even back in 1863 with the very first banking regulator, that if the ability of our regulators to do their jobs fluctuated every time Congress negotiated a spending bill, or every time Congress changed hands, that the financial markets would be thrown into chaos.” [Sen. Elizabeth Warren, 11/15/22]