As the new Consumer Financial Protection Bureau (CFPB) begins to take shape, the Chamber is urging it to protect consumers from predatory actors while ensuring that consumers and small businesses continue to have access to affordable credit.

Testifying before the House Financial Services Committee on March 2, Jess Sharp, executive director of the Chamber’s Center for Capital Markets Competiveness, said, “We want to work with the CFBP to ensure that it takes a targeted approach to regulation and enforcement, taking care to prevent sweeping policies that would impose duplicative regulatory burdens on small businesses and, perhaps even more importantly, that would prevent small businesses from obtaining the credit they need to expand, and create the new jobs that our economy so desperately needs.”

The Dodd Frank financial reform law grants CFBP tremendous power with virtually no oversight. According to the Chamber, if that power isn’t used carefully, there could be serious collateral damage to America’s job creators. CFBP poses two significant threats to small businesses.

First, the new agency will have regulatory control over affordable and accessible consumer financial products that small businesses tend to rely on to fund and grow their businesses – credit cards, home equity loans, and the like. An overly aggressive or uncertain regulatory environment could reduce availability of these financial products for small businesses.

Second, small businesses themselves may be subject to the new agency’s regulations and other oversight if they engage in one of the 10 broadly described activities laid out in the law, such as extending credit, providing financial advisory services, selling or issuing stored value cards.

“The decisions made over the next several months, both before and after the handoff to the new CFPB, will shape the consumer financial regulatory environment for years to come,” Sharp told the House panel.

In a March 1 letter to Treasury Secretary Timothy Geithner and members of Congress, the Chamber and 12 other industry groups offered six recommendations for CFBP:

1. Develop Effective and Efficient Structure to Facilitate Protection of Consumers and Promotion of Economic Growth - After many agencies failed to act appropriately ahead of the financial crisis, this new bureau must communicate in a way that inspires confidence that it will protect consumers in a uniform manner
2. Empower Consumers by Rationalizing Disclosure Requirements - The bureau should continue to improve and simplify disclosure across products while not stifling consumer choice of financial products
3. Prevent Duplicative and Inconsistent Regulation of Main Street Businesses - Compliance is critical, so the bureau must take steps to clarify its requirements and ensure Federal regulators are speaking with one voice
4. Preserve Small Business Access to Credit  - Regulations should not eliminate, or make impractical, the credit products that small businesses rely on for capital
5. Ensure Coordination with Federal and State Prudential Regulators - The bureau should involve prudential regulators early and often to ensure proper consideration of safety and soundness issues
6. Defer Rulemaking Until After Confirmation of a Director - Issuing rules prior to the Senate confirming a director to the bureau will prevent Congress from exercising the one avenue for oversight that it expressly retained

Read more about the regulatory authority mandated by the Dodd-Frank financial regulatory reform law.