Citizen Outreach has joined forces with other conservative organizations to challenge a new federal rule that would hide medical debt from credit reports. The group recently signed an important letter to Congress opposing what they see as government overreach by the Consumer Financial Protection Bureau (CFPB).
The Letter
The letter, dated February 20, 2025, expresses deep concerns about the CFPB’s decision to eliminate medical debt records from major credit reports. Chuck Muth, President of Citizen Outreach, added his signature alongside other conservative leaders who believe this rule will harm both consumers and the market.
“We are writing to express our concerns regarding the Consumer Financial Protection Bureau’s finalized rule on eliminating medical debt records from consideration in major credit reports,” the letter states. “We believe that this rule will harm consumers and impede lenders from meeting consumer demand due to incomplete and inaccurate assessments of borrower worthiness.”
Why This Matters to Conservatives
For conservatives who value limited government, this rule represents federal agencies overstepping their bounds. Since 2005, creditors have been allowed to consider medical debt when making lending decisions. The CFPB’s new rule removes this longstanding practice.
The letter explains how the rule would:
“arbitrarily amend Regulation V of the Fair Credit Reporting Act (FCRA) by removing a longstanding exception—promulgated in 2005—allowing lenders to use medical debt information to make risk determinations on allocating credit, and banning credit reports from including medical debt.”
Conservative groups argue this creates a dangerous precedent. As the letter warns:
“Eliminating medical debt will have a domino effect where additional consumer data points could be incrementally removed from credit reports.”
The Real Impact
The coalition letter doesn’t mince words about the potential consequences:
“Removing this information from consideration will reduce the accuracy of credit assessments and distort the true credit worthiness of borrowers. This will in turn lead to deserving borrowers losing access to credit and reducing economic activity.”
The letter also draws a stark comparison to previous financial crises:
“This rule would generate moral hazard akin to the subprime mortgage crisis, where reckless lending created severe financial instability and triggered mass defaults.”
Constitutional Concerns
The letter raises important questions about whether the CFPB even has the authority to make such a rule:
“It also remains uncertain whether the CFPB’s interpretation of its authority under the FCRA and CFPA can be justified. The Administrative Procedure Act requires agencies to administer rulemaking proposals in line with the intent of Congressional legislation. To date, no legislation has targeted the elimination of medical debt from credit assessments.”
Healthcare Industry Effects
The letter points out potential unintended consequences for healthcare providers:
“Removing consideration of medical debt also will have detrimental effects on the U.S. healthcare industry. Small healthcare practices could see a sharp reduction in cash flow, which could lead to rising healthcare costs.”
Free Market Principles
The coalition of conservative groups believes this rule interferes with how creditors evaluate risk – a core function of the free market.
“The CFPB is attempting to interfere in how creditors choose to assess the reliability and creditworthiness of future borrowers,” the letter explains. “This is a flagrant contravention of free-market principles.”
Call to Action
The letter concludes with a clear call for congressional action:
“For these reasons, we urge you to nullify this rule through a joint resolution of disapproval under the Congressional Review Act.”
What Happens Next
The Congressional Review Act gives lawmakers a limited window to overturn rules from federal agencies. If enough members of Congress support the resolution, they could nullify the CFPB’s rule and preserve the traditional credit reporting system that includes medical debt.
For conservatives concerned about government overreach, this represents a crucial battle over how much power unelected bureaucrats at agencies like the CFPB should have to regulate the economy and interfere with private business decisions.
This article was written with the assistance of AI. Please verify information and consult additional sources as needed.
