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When it Rains, it Pours for Embattled CFPB

washingtonDC_lightning_156467327_300By Bill Grabarek, Senior Editor

Multiple congressional bills and a lawsuit are threatening the structure and the functions of the CFPB, but Texas Republicans Sen. Ted Cruz and Rep. John Ratcliffe are striking hardest at the bureau, introducing companion bills (S 370 and HR 1031) on Feb. 14 to repeal Title X of the Dodd-Frank Act, which created the agency.

Despite the name of the agency, Consumer Financial Protection Bureau, the bureau “does little to protect consumers,” according to Cruz. “During the Obama administration, the CFPB grew in power and magnitude without any accountability to Congress and the people, and I am encouraged by the actions President Trump has begun to take to roll back the harmful impacts of an out-of-control bureaucracy,” he said.

ratcliffe_johnThe past several years indicated why “massive swaths” of federal regulations aren’t the solution to help “hard-working Americans,” and that the CFPB ended up hurting the American consumers it was intended to help, according to Rep. Ratcliffe. “I’m optimistic at our renewed chances of advancing this effort with a willing partner in the White House,” he added. Republicans also control the Senate and the House.

cruz_tedBoth bills are quite short and to the point, simply reading, “The Consumer Financial Protection Act of 2010 is hereby repealed and the provisions of law amended or repealed by such Act are restored or revived as if such Act had not been enacted.” The House bill was referred to the Financial Services Committee and the Senate bill was referred to the Committee on Banking, Housing and Urban Affairs.

Democrats have staunchly defended the CFPB and its record of $11.7 billion in relief to consumers from its enforcement actions. In January, Senate Democrats sent a letter to Cordray, praising his work and emphasizing “the need for his leadership at the agency in President-elect Donald Trump’s Administration.” The Senators noted that polling shows the majority of Americans agree that the CFPB is “doing great work.” Seventy-one percent of Americans—Republicans and Democrats—approve of the CFPB’s mission, and 55 percent of Republicans who voted for President-Elect Trump believe that the CFPB should be left alone to continue its work or even be given expanded authority to do more to protect American families, according to a press release.

The letter was signed by Sen. Sherrod Brown (D-Ohio), the Banking Committee’s Ranking Member, and Sens. Jack Reed (D-R.I.), Robert Menendez (D-N.J.), Jon Tester (D-Mont.), Mark R. Warner (D-Va.), Elizabeth Warren (D-Mass.), Joe Donnelly (D-Ind.), Brian Schatz (D-Hawaii), Chris Van Hollen (D-Md.), and Catherine Cortez Masto (D-N.V.).

Bill Challenges Single-Director Leadership

fischer_debAlso part of the deluge of attacks, U.S. Senator Deb Fischer (R-Neb.) introduced legislation (S 105) that would replace CFPB Director Richard Cordray’s position with a five-member board of directors appointed by the president and confirmed by the Senate.

No more than three members of the board would be from the same political party, board members would serve a five-year term and a chairman would be appointed by the president, according to the legislation, which has been referred to the Committee on Banking, Housing and Urban Affairs. If signed into law, it would take effect on the date at least three members have been confirmed by the Senate to serve on the board of directors. The bill is co-sponsored by Sens. John Barrasso (R-Wyo.) and Ron Johnson (R-Wis.).

“For years, the bad decisions made by a single director at the CFPB have kept families locked out of economic opportunity,” said Fischer. “My bill would prevent this misconduct by divesting the authority from one director to a five-member bipartisan board. This much-needed structural adjustment would bring accountability to the bureau and give more Americans a chance to build their own businesses and provide for their families.” This is the third time Fischer has introduced a bill to restructure the CFPB. However, her latest effort comes at a time when Republicans control the House and Senate.

Additional Attacks on CFPB

Fischer’s bill is just one of the many storms the CFPB has had to endure lately. There is one joint resolution in the Senate (SJR 19) and two in the House (HJR 62, 73) that provide “congressional disapproval” for the final prepaid accounts rule, and say that “such rule shall have no force or effect.” What’s more, President Trump met with former U.S. Rep. Randy Neugebauer, a republican from Texas, considered to be in the running to lead the CFPB.

Meanwhile, the lawsuit, PHH Corp., et al. v. Consumer Financial Protection Bureau, which deemed the CFPB’s single-director structure unconstitutional, continues to be a black cloud hanging over the CFPB. Last year, the U.S. Court of Appeals for the D.C. Circuit determined the CFPB is controlled by a single, “unaccountable, unchecked” director, who can only be removed for just cause, which poses risk of “arbitrary decision-making and abuse of power.” The court ultimately ruled that the CFPB could continue operating, but that the director can now be replaced at will. The bureau has filed a petition for a rehearing before the entire appellate court.

Hensarling Memo Causes Stir

hensarling_jebAnother possible bill attacking the CFPB might come from U.S. Rep. Jeb Hensarling (R-Texas), who had introduced legislation, the Financial CHOICE Act (HR 5983), to the House last year. The bill, like Fischer’s, wanted to replace Cordray’s position with a five-member board. The Financial Services Committee chairman’s bill also would have made the agency subject to congressional oversight and appropriations, among other mandates. The lawmaker plans to introduce an updated version of the Financial CHOICE Act, but hasn’t decided when, a spokesman tells Paybefore.

Although Hensarling has not yet introduced a bill, a memo outlining changes to his earlier legislation has been making the rounds, according to The Hill. Possibly his most significant change to the new bill is his about-face taken on a bipartisan, board-led bureau. Hensarling now wants to keep the single-director structure, and the director would be directly under the president’s authority, according to the Feb. 6 memo. Other proposed changes to the CFPB include eliminating the database where consumers can submit complaints about financial institutions, prohibiting the agency from regulating entities already controlled by the SEC or the Commodity Futures Trading Commission, and limiting the powers of the CFPB by barring it from levying fines and only allowing the agency to issue cease-and-desist letters and subpoenas.

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