Transparency in CFPB Cost-Benefit Analysis Act
- Sponsor
- Rep. Loudermilk, Barry [R-GA-11]
- Committees
- Financial Services Committee (primary)
- Last action
- Mar 25, 2025
Bottom line
This bill significantly increases the analytical and procedural requirements for the CFPB when issuing new regulations, aiming to ensure greater transparency and accountability regarding economic impacts and reduce regulatory burdens.
What it actually does
This bill mandates the Bureau of Consumer Financial Protection (CFPB) to conduct extensive quantitative and qualitative cost-benefit analyses for all proposed regulations. It requires the CFPB to justify the need for new rules, examine alternatives, assess duplication with existing federal regulations, and consult with the Small Business Administration's Office of Advocacy if small businesses face increased costs. The bill also requires transparency regarding the underlying assumptions and studies used in these analyses.
Proponents argue
Proponents argue that this bill enhances transparency and accountability in federal rulemaking by requiring the CFPB to thoroughly justify its regulations with robust cost-benefit analyses. They contend it will prevent duplicative or overly burdensome rules, particularly for small businesses, fostering economic activity and competition by reducing regulatory costs and ensuring regulations are data-driven.
Opponents contend
Opponents might argue that these additional requirements could unduly slow down or hinder the CFPB's ability to issue timely and necessary consumer protections. They may contend that the existing rulemaking process is sufficient and that adding more bureaucratic hurdles could make it harder for the CFPB to respond effectively to emerging financial risks or market failures, potentially leaving consumers vulnerable.
The bill is very short and straightforward, allowing ample time for an informed reader to understand its provisions and implications.
Section 2, amending 12 U.S.C. 5512(b)(5)(A)(v), (ix), (x), (xi), (xii)
Requirement for Comprehensive Cost-Benefit Assessment
This provision mandates that every proposed CFPB regulation must include a detailed quantitative and qualitative assessment of all anticipated direct and indirect costs and benefits. This includes compliance costs for regulated entities (including small businesses), effects on economic activity, efficiency, competition, capital formation, and regulatory/administrative implementation costs. It also requires justification if quantified benefits do not outweigh costs or if net benefits don't outweigh alternatives, an assessment of burden distribution, and a probability distribution of outcomes when feasible.
Supporters argue
Supporters argue this ensures regulations are economically sound, prevent undue burdens on businesses, and promote overall economic efficiency by forcing the CFPB to fully account for the costs and benefits of its actions.
Critics contend
Critics might contend that these extensive requirements could paralyze the CFPB's ability to act swiftly on consumer protection issues, creating unnecessary delays and increasing the cost of rulemaking without a commensurate benefit.
Tradeoffs
Balances the desire for rigorous economic analysis and regulatory efficiency against the potential for increased administrative burden and slower responsiveness in consumer protection.
Section 2, amending 12 U.S.C. 5512(b)(5)(A)(i), (ii), (vi), (vii)
Requirement for Stating Need, Examining Alternatives, and Justifying Action
This provision requires the CFPB to include a statement of the need for the proposed regulation, an examination of why the Bureau must undertake the regulation (and why other authorities cannot), and an identification and analysis of reasonable alternatives (including modifying existing regulations), along with their respective costs and benefits.
Section 2, amending 12 U.S.C. 5512(b)(5)(A)(iii), (iv)
Examination of Duplication with Other Federal Regulations
This provision mandates that the CFPB's notice of proposed rulemaking must include an examination of whether the proposed regulation is duplicative, inconsistent, or incompatible with other Federal regulations and orders. If it is, the Bureau must discuss why the regulation is justified, how it can coexist, and how the Bureau plans to reduce associated regulatory burden.
Section 2, amending 12 U.S.C. 5512(b)(5)(A)(viii)
Consultation with Small Business Administration Office of Advocacy
If the CFPB determines a proposed regulation would increase costs for small businesses, this provision requires the Bureau to consult with the Office of Advocacy within the Small Business Administration (SBA) to determine ways to minimize the direct and indirect costs imposed on small businesses.
Section 2, amending 12 U.S.C. 5512(b)(5)(B)
Disclosure of Underlying Assumptions and Studies
This provision requires the CFPB to include a discussion of underlying assumptions used as a basis for the required information (cost-benefit analysis, etc.) and a description of any studies or data used, including whether such studies were peer-reviewed.