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The CFPB and Dodd-Frank Could Face another Congressional Threat

Congressional Republicans hoping to hobble the CFPB and unwind the law that supports it, the Dodd-Frank Act, have another tool at their disposal. They could use the budget reconciliation process, according to Law 360.

The move would be complicated but possible. And it would only enable Dodd-Frank opponents to go after a line of credit from the U.S Treasury Department preventing a large bank failure, and a few other items. The reconciliation process also could eliminate independent funding for the CFPB, Law 360 said, quoting budget and political experts.

Steep Path

But difficulties abound. For one, targeting the CFPB’s source of money, via the Federal Reserve, might be viewed by the Senate parliamentarian as a policy change, not a budget change, erecting a higher hurdle to resolve the matter through budget reconciliation, Law 360 said. The reconciliation process enables the Republican majority to avoid a filibuster from Democrats. The filibuster remains an option for such efforts despite it being eliminated recently to win approval for Neil Gorsuch’s appointment as a U.S. Supreme Court justice. Congress also faces a big “to-do” list, the article notes, which could make using the reconciliation process a lower priority than other legislative tasks.

“There’s still some desire to get some things accomplished on Dodd-Frank. But the path to 51 votes in the Senate is difficult. The path to 216, for now, in the House is also difficult,” Aaron Cutler, a partner at Hogan Lovells LLP and a former top House Republican staffer, told Law 360.

The CFPB already is fighting a court battle over the constitutionality of its leadership structure, and could undergo a leadership change under the Trump administration. Meanwhile, Jeb Hensarling (R-Texas), chairman of the House Financial Services Committee, is expected to reintroduce a revised Financial Choice Act, according to a report in The Hill. The new legislation would rename the CFPB as the Consumer Financial Opportunity Agency and rein in its powers, according to an outline sent to Financial Services Committee Republicans.

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