H.R. 2331: Transparency in CFPB Cost-Benefit Analysis Act

The bill titled "Transparency in CFPB Cost-Benefit Analysis Act" aims to enhance the rulemaking processes of the Bureau of Consumer Financial Protection (CFPB). Here is a breakdown of the main provisions and requirements the bill introduces:

New Rulemaking Requirements

The bill proposes additional requirements for notices of proposed rulemaking issued by the CFPB. These requirements include:

• Statement of Need: Each proposed regulation must include a clear statement about why it is necessary.
• Market Analysis: An evaluation of whether existing private market solutions or state and local authorities can adequately address the issues the regulation intends to solve.
• Duplication Check: An examination to determine if the proposed regulation overlaps with, or contradicts, existing federal regulations. If there are conflicts, there must be a discussion justifying the new regulation.
• Cost-Benefit Analysis: A comprehensive assessment of both direct and indirect costs and benefits resulting from the regulation must be provided, which includes:
  • Compliance costs for all affected parties, particularly small businesses.
  • Effects on economic activity, efficiency, competition, and capital formation.
  • Regulatory and administrative costs for implementing the regulation.
  • Costs incurred by state, local, and tribal entities.
• Alternative Solutions: Identification of reasonable alternatives to the proposed regulation, including modifications to existing regulations.
• Analysis of Alternatives: A detailed cost-benefit analysis of any identified alternatives.
• Consultation Requirement: If the regulation is likely to impose increased costs on small businesses, the CFPB must consult with the Office of Advocacy of the Small Business Administration to explore ways to minimize those costs.
• Justification for Regulation: If the expected benefits do not outweigh the costs, a justification for proceeding with the regulation must be provided.
• Burden Assessment: An assessment of how the regulatory burden will affect consumers and small businesses, including whether any group will be disproportionately affected.
• Probability Distribution: Whenever feasible, a statistical probability distribution of the anticipated outcomes of the regulation must be included.

Assumptions and Data Requirements

As part of the required information for proposed regulations, the CFPB must also provide:

• A discussion regarding the underlying assumptions that inform the analysis.
• A description of any studies or data used in the analysis, including mentioning if the studies were peer-reviewed.

Overall Impact

The goal of the legislation is to ensure that the CFPB conducts thorough and transparent cost-benefit analyses for its proposed regulations, which could lead to better-informed policy decisions and potentially limit unnecessary regulatory burdens on businesses and consumers.

Relevant Companies

• None found