On July 24, the House Financial Services Committee requested public feedback on a discussion draft of legislation titled the “CFPB Reform Act of 2026,” which proposes changes to the structure and powers of the Bureau. The request followed a full committee hearing on the future of the CFPB (previously covered by InfoBytes here) and set an August 21 comment deadline.

Title I of the discussion draft would bring the CFPB under the regular congressional appropriations process, amend the treatment of the Consumer Financial Civil Penalty Fund by requiring the Bureau to transfer leftover amounts to the general fund of the Treasury after paying direct victims, and add new cost-benefit and small business impact analysis requirements for proposed rulemakings. It also would establish a new enhanced review process for major rules or orders, to be conducted by the director of the Office of Management and Budget, and would create a dedicated CFPB inspector general.

Title II attempts to clarify the Bureau’s authority over unfair, deceptive, or abusive acts and practices, and includes a requirement that the Bureau define “abusive act or practice” by rule, a bar on declaring an act unlawful based on discrimination, and a new statutory definition of “substantial injury” requiring concrete, quantifiable harm. The title also would give a covered person 180 days to cure a self-identified violation before the Bureau may initiate an administrative proceeding or civil action, limit venue for such enforcement actions, and bar the Bureau from seeking civil money penalties for conduct predating a covered person’s most recent consumer compliance rating.

Title III would create a safe harbor for small-dollar credit products valued at $3,500 or less under TILA. Separately, Title III would require the Bureau and eight other financial agencies to display a “guidance clarity statement” on any guidance, stating: (i) that it does not have the force of law; (ii) that it does not establish rights or obligations for any person; (iii) that it is not binding on the agency or the public; and (iv) that — if the guidance suggests how regulated entities may comply with law — noncompliance with the guidance does not necessarily establish a violation of law.

Title IV also would let certain covered institutions elect prudential regulator supervision, require the Bureau to consult prudential and state regulators before rulemakings affecting depository institutions and credit unions, and require advance notice to such regulators before the Bureau brings an enforcement action against those institutions. Title IV would raise the asset threshold for CFPB supervision of large banks, savings associations and credit unions from $10 billion to $21 billion, with periodic adjustments tied to gross domestic product.

Title V purports to “reduce reliance on the enforcement process as a means of establishing regulatory policy.” It would lower an existing civil money penalty tier’s cap from $1 million to $50,120, add self-reporting as a mitigating factor, restrict the Bureau’s market monitoring functions from being used in enforcement, and bar a state attorney general from suing over the same conduct once the Bureau has given notice of its own intended or pending action.