Who Regulates The Regulators? Ed Perlmutter

The power in Washington, DC is shifting . . . quickly, but the Democratic stronghold on Congressional oversight of the CFPB remains steady. Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services recently announced new Subcommittee Chairs for the 117^th Congress, appointing Ed Perlmutter (CO-7) as the new Chairman of the Subcommittee on Consumer Protection and Financial Institutions (CPFI). House Rules give this position significant influence over the CFPB and ARM industry.

The Rules governing the House of Representatives create standing committees with defined jurisdictions. The House Financial Services Committee (HFC) enjoys broad jurisdiction over all “banks and banking,” “money and credit,” and “financial aid to commerce and industry,” including the ARM Industry. Any legislation involving financial services is referred first to the Financial Services Committee for consideration. Financial services legislation does not become law without the approval of this committee. Powerful is the committee that oversees the nation’s financial systems.

The CPFI Subcommittee is one of 6 standing subcommittees of the HFC, each lead a chairperson who manages subcommittee agendas. The CPFI Subcommittee is dedicated solely to overseeing consumer protection and financial institutions, including “all matters related to the Consumer Financial Protection Bureau.” Thus, Ed Perlmutter will serve as the Chairman of the CFPI Subcommittee overseeing the most powerful financial regulator in the nation. That’s who regulates the regulators.

So, who is Ed Perlmutter? Rep. Perlmutter is an attorney by trade as well as a moderate Democrat from Colorado who served as a Colorado State Senator from 1995 to 2003. In 2007 he was elected to the House of Representatives, where he has served since. Rep. Perlmutter has sponsored more than a dozen bills related to the financial sector of the economy including the Relief for Small Business and Nonprofits Act (H.R. 6361) to provide loan payment relief to small businesses and nonprofits affected by Covid-19, the FinCEN Improvement Act of 2018 (H.R.6411) to enhance enforcement of financial crimes, and the Examination and Supervisory Privilege Parity Act of 2014 (H.R. 5062) which leaves intact legal privileges asserted by non-depository regulated entities when sharing information with government agencies.

More recently, Rep. Perlmutter introduced the Secure and Fair Enforcement Banking Act of 2019 (the SAFE Bank Act) (H.R. 1595) which seeks to prohibit federal banking regulators from penalizing depository institutions for providing banking services to legitimate marijuana businesses (this bill was passed by the House and remains in the Senate).

By any measure, Rep. Perlmutter has experience dealing with issues impacting the financial services industry. He has also demonstrated his willingness to be critical of regulators who oversee the financial services markets. How he will regulate the CFPB remains to be seen.

The ARM industry should have high expectations for Rep. Perlmutter. Now that the Director of the CFPB serves at the pleasure of the President, the need for regulatory oversight remains high. It will be important for Rep. Perlmutter to ensure that the CFPB remains true to its mission while at the same time stays within the authority of Dodd-Frank. For the ARM Industry, it will be important to educate Rep. Perlmutter as to the finer points of Regulation F and the important protections it brings for consumers and clarity for the industry. The ARM industry is counting on Rep. Perlmutter to appropriately regulate the regulators.