Lawmakers to consumer bureau: Slow down on international transfer rules

By Peter Schroeder - 08/16/12 02:08 PM ET

A bipartisan group of House lawmakers is calling on the Consumer Financial Protection Bureau (CFPB) to slow its implementation of new rules on international money transfers.

In a letter sent to Richard Cordray, the bureau's director, 32 lawmakers warned that the new rules would create a "nearly impossible" compliance challenge for financial institutions. They caution that new disclosure requirements for so-called "remittance" transfers could drive some companies to no longer offer the service, reducing competition and leading to higher fees.

"We are very concerned that whatever price certainty and transparency that the final rule imparts will come at the cost a significantly higher price and drastically reduced product availability," they wrote. "Hence, international transfers may no longer be feasible for consumers who support relatives overseas, for parents of students studying abroad and for consumers who purchase products and services overseas."

Of the 32 members signing on to the letter, six — Reps. Yvette Clarke (N.Y.), Janice Hahn (Calif.), Alcee Hastings (Fla.), Larry Kissell (N.C.), Jim Matheson (Utah) and Mike Ross (Ark.) — were Democrats. The letter was headed by Rep. Blaine Luetkemeyer (R-Mo.).

The bureau's final rule is set to take effect in February, but the members called on the agency to delay its implementation for two years, and to conduct a study of the costs the new requirements could create.

While members of Congress were pressing the CFPB to slow down, a coalition of consumer groups sent their own letter to congressional leaders urging a timely implementation. The groups, led by Americans for Financial Reform, contend that financial institutions have ample time to get up to speed on the new rules, and that there is ample competition in that marketplace to protect consumers.

The CFPB announced the new rules for remittances, required under the Dodd-Frank financial reform law, in January, just days after President Obama recess-appointed Cordray. The bureau contends that under the current system, the transfers can include hidden fees and exchange rates that dramatically shrink the amount actually being sent abroad. It touted the new rules as making clear to consumers how much money they would be spending to transfer that cash.

"People sending money to their loved ones in another country should not have to worry about hidden fees," said CFPB Director Richard Cordray. "With these new protections, international money transfers will be more reliable. Consumers will know the costs ahead of time and be able to compare prices."

The agency later updated the rule from its original proposal to exempt firms that do less than 100 transfers a year from the new requirements.