Preventing Overreach by the Consumer Financial Protection Bureau

From yesterday’s Senate debate on S. 3217, the financial regulation legislation, page S4064.

   Ms. SNOWE. During the Senate’s consideration of this legislation, I authored an amendment approved by voice vote to confirm that small business merchants and retailers would not be subject to regulation by the Consumer Financial Protection Bureau, CFPB, when they engage in credit sales. This amendment was supported by a number of key small business stakeholders, including the National Federation of Independent Business, IBNF, and the U.S. Chamber of Commerce. The amendment included a three-prong test that excludes such entities from the CFPB when they (1) only extend credit for the sale of nonfinancial goods and services; (2) retain the credit they have extended on their books; and (3) meet the relevant industry size threshold to be a small business, based on annual receipts, pursuant to the Small Business Act. It is my understanding that wholesale merchants and distributors and manufacturers would not generally need to avail themselves of that exclusion because their sales of nonfinancial goods and any related financing they may provide, are not to consumers in the first instance. Is this view correct?

   Mr. DODD. I believe point of the Senator from Maine is well taken. Wholesalers and manufacturers do not provide any products to consumers for their personal, family, or household use, let alone consumer financial products or services. Thus, wholesalers’ and manufacturers’ sales of nonfinancial goods to other businesses would be outside the bureau’s jurisdiction.

Our thanks to Sen. Snowe (R-ME) and Chairman Dodd (D-CT) for clearly establishing the legislative history on the reach of the Consumer Financial Protection Bureau. The Bureau does NOT regulate manufacturers.

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