WASHINGTON: The Trump administration defended its drive to scale back federal oversight of the US financial sector on Thursday, arguing that lighter regulation would expand access to credit and lower costs for consumers, while Democrats accused the White House of weakening protections against financial misconduct during a combative Senate hearing.
Appearing before the Senate Banking Committee to present the Consumer Financial Protection Bureau's (CFPB) semi-annual report to Congress, Acting Director Russell Vought said the agency had been transformed from what he called an activist regulator into one focused on enforcing laws within its statutory authority.
"Our team took a look under the hood and found an agency that was weaponized out of control and had gone far beyond its statutory mandate under previous administrations," Vought told lawmakers. He argued that excessive regulation had imposed costs on consumers through "higher prices, reduced product offerings, increased borrowing expenses and misuse of their taxpayer dollars."
Vought said the CFPB had ended what he described as "regulation by enforcement" and was providing financial institutions with greater certainty by limiting supervision and enforcement to areas explicitly authorised by Congress.
"We're giving the American people clear understanding of where we will supervise and enforce and it is not going to be in areas that you all have not given a statutory authority," he said. "Congress makes these laws ... we want to be very, very cautious in using those tools."
He also reiterated his long-held view that the CFPB should ultimately be restructured, saying the bureau "remains structurally defective" and should be brought under the Congressional appropriations process to improve accountability.
Committee Chairman Tim Scott backed the administration's approach, arguing that heavy regulation had reduced access to credit, particularly for lower-income Americans.
"When Washington writes rules that push responsible products out of the market, people do not stop needing those products. They are just left with limited choices, higher costs, and worse alternatives," Scott said. He maintained that clear and predictable rules would promote competition while protecting consumers.
Democrats strongly rejected that assessment. Ranking Member Elizabeth Warren accused the administration of dismantling consumer protections and abandoning enforcement actions against companies accused of wrongdoing.
"Since you took over the CFPB the bureau has dropped more than 40 enforcement actions against giant corporations that have cheated American families," Warren told Vought. She alleged that consumers had been denied billions of dollars in refunds after the bureau withdrew or modified several cases.
Throughout the hearing, Democratic senators questioned Vought over decisions involving banks, credit unions, student loan servicers, medical debt, military lending and consumer complaint systems. They argued that scaling back enforcement would leave consumers with fewer avenues for redress.
Created by the 2010 Dodd-Frank Act in the aftermath of the global financial crisis, the CFPB serves as the federal government's principal consumer financial watchdog. Since opening its doors in 2011, the bureau has secured billions of dollars in consumer relief through enforcement actions involving banks, mortgage lenders, credit reporting agencies and other financial firms.
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