The Government Accountability Office ("GAO") issued a report in which it determined that the Consumer Financial Protection Bureau ("CFPB") completed the necessary steps for soliciting, considering and incorporating input from small business review ("SBR") panels as to "rulemaking efforts that are expected to have a significant economic impact on a substantial number of small entities."

Based on interviews with 57 of the 69 small-entity representatives who participated in the four SBR panels, GAO found that most of the representatives believed the process to be useful but also felt that it could be improved. The GAO found, among other things, that:

  • more than three-quarters of the representatives interviewed affirmed that the CFPB materials helped them to provide constructive input;
  • two-thirds of the representatives confirmed that their industry was represented on the panels;
  • two-thirds of the representatives felt that an insufficient amount of time was allotted for discussing at least one of the topics on the panels' agendas; and
  • one-third of the representatives suggested that more time and/or additional meetings would improve the process.

GAO noted that representatives' approval of being included in the rulemaking process didn't always translate into approval of the result:

While 36 of 57 stated CFPB at least partially considered their comments in its rulemakings, most representatives expressed disagreement with CFPB's final rules for reasons such as increased cost of compliance.

Commentary / Steven Lofchie

One of the main complaints of small business reps interviewed in the report was that the CFPB had no understanding of the activity it regulated. Whereas conflicts of interest can be monitored and controlled to the extent that they exist, there is no easy way to remedy a regulator's fundamental ignorance of the business they're charged with regulating. If an individual without any securities/banking experience shouldn't be put in charge of a large securities/banking firm, then how is it justifiable to put a person with no relevant experience in charge of the entire securities/banking industry?

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