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Witnesses and lawmakers press for limits on CFPB civil investigative demands
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Summary
Multiple witnesses described civil investigative demands (CIDs) as burdensome to small and mid-size firms and supported statutory reforms to narrow scope, protect confidentiality of petitions to modify, and create early-scope review.
A central topic at the Financial Institutions Subcommittee hearing was the CFPB’s use of civil investigative demands, commonly called CIDs. Several witnesses described CIDs as expansive, costly, and disruptive to businesses and said the bureau’s CID practice should be reformed by statute.
“Civil investigative demands or CIDs are one of the primary tools used by the CFPB to compel companies to produce documents, answer questions, and even provide oral testimony,” Rebecca Keane, a partner at Hudson Cook and a former Federal Trade Commission official, told the subcommittee. Keane said CIDs “impose enormous costs on companies and result in business disruptions that last months, often years.”
Keane described the burdens CIDs place on smaller firms: multiple, detailed requests with tight deadlines and substantial electronic discovery costs. She told lawmakers that companies who seek to modify or limit a CID often face a difficult choice because the law’s petition process can make the investigation public.
Representative Andy Barr said those characteristics supported his CID Reform Act, which he said would “create a process to address concerns early in the investigation to adjust the scope of it to an appropriate size” and would require the CFPB to treat petitions to modify as confidential. Brian Schneider, a former CFPB supervision official, and David Pomeran of the Consumer Bankers Association echoed calls for limits on CID scope and for more transparent procedures.
Witnesses urged procedural guardrails in three areas: (1) more specific statutory standards that must be met before a CID issues (Keane said a CID should issue only when there is reason to believe a violation has occurred), (2) procedures to review and narrow overly broad requests early, and (3) confidentiality protections for companies that seek to modify a CID so those companies are not publicly branded as under investigation simply for contesting scope.
Committee members asked witnesses about the cost of responding to CIDs. Keane and Schneider offered examples of short CID deadlines and heavy document demands; Schneider added that initial investigative demands could cost “tens, if not hundreds of thousands of dollars” for a single company to comply. Several members, including Representative Scott and Representative Heisinger, pressed witnesses on how CID reform would protect smaller institutions without hampering legitimate enforcement.
The hearing included no formal legislative action on the CID Reform Act; the bill was discussed and proponents urged Congress to move it forward.
