By Douglas Gillison
WASHINGTON (Reuters) -The top U.S. government watchdog for consumer finance has formally scrapped a registry for non-bank financial companies caught violating consumer laws, asserting that its costs outweighed any benefit to the public, according to a government notice issued Tuesday.
The repeal of the registry — which the prior administration of President Joe Biden had said would help catch and deter repeat offenders — was first proposed in May and is part of President Donald Trump’s wholesale reduction of the legal authorities of the U.S. Consumer Financial Protection Bureau, an agency Trump and other top officials have said should be shut down entirely.
Tuesday’s notice followed CFPB legal guidance issued Monday reversing Biden-era policy according to which states should be allowed to ban medical debts from consumers’ credit records. With the CFPB’s support, a court in July also struck down Biden regulations barring medical debt from consumer reports.
The CFPB on Tuesday did not immediately respond to a request for comment
However, in a cost-benefit analysis accompanying the notice, the agency said the offender registry duplicated an existing multi-state registry system, meaning it offered little benefit, and that ending the registry would result in about $360 in reduced costs per company.
In public remarks, industry organizations and state regulators supported the decision to rescind the registry for similar reasons.
However, Better Markets, which advocates for stronger consumer protections, said 50 percent of the US lending market was now in the hands of non-banks, meaning ending the registry would increase risks to consumers and financial stability as well as lessen deterrence for repeat offenders.
(Reporting by Douglas Gillison in WashingtonEditing by Nick Zieminski)
Comments