The Assault on the CFPB: Current State of Play
The Consumer Financial Protection Bureau was created in the face of industry resistance. With a Republican Congress and President Trump in the White House, it is facing an attack that could be the final blow.
In a joint statement last week, Sen. Ted Cruz and Rep. John Ratcliffe presented the Repeal CFPB Act, which targets Title X of Dodd-Frank. The congressmen claim that if passed, the Act would “free consumers and small businesses from the CFPB’s regulatory blockades and financial activism.” In fact, it would completely eliminate the CFPB as an agency. (Consumerist, Lawmakers Introduce Legislation that would Abolish the CFPB)
Should the efforts of Cruz and Ratcliffe fail, there is still House Financial Services Committee Chairman Jeb Hensarling’s plan to revise his earlier bill with the aim of weakening, if not completely destroy the CFPB and pacify banks by removing some key components of annual stress tests that evaluate how a bank will perform in a financial crisis.
In a memo to lawmakers, Hensarling outlined the details of his plan. In an article last week, Bloomberg News reported some of the specifics from the memo:
Hensarling is seeking to eliminate much of the Consumer Financial Protection Bureau’s regulatory powers, and transform it into a law enforcement agency. The memo proposes the controversial regulator only be able to pass rules that have been mandated by Congress. The plan would further restrict the agency by eliminating its authority to supervise financial firms and doing away with a public database documenting consumer complaints. (Bloomberg News, New GOP Memo Targets Stress Tests, CFPB in Dodd-Frank Changes)
Hensarling’s other proposal addresses the role of the CFPB director. He has asserted his belief that the bureau should be under the supervision of a single director, and that the director should ‘be removable by the President at-will”. (Bloomberg News) Hensarling has also announced his opinion that the current CFPB director should be fired by Trump before his term ends next summer. The Bureau is presently engaged in appealing a court ruling that would permit the President to do exactly that without cause.