Banking groups are pushing for a major change to the leadership of the Consumer Financial Protection Bureau, and want it attached to must-pass government funding legislation.
A wide range of financial industry trade groups wrote to congressional appropriators Thursday and asked them to use government funding bills to change the agency to a five-member bipartisan commission.
Today, the bureau is headed by a single director, former President Barack Obama appointee Richard Cordray. Banks regulated by the bureau have chafed at Cordray’s power to supervise them and write rules unilaterally.
Republicans have argued that the set-up of the bureau, created by the 2010 Dodd-Frank law, is unconstitutional. A federal court ruled in October the single-director structure does run afoul of the separation of powers in government, but that ruling is under appeal.
“The current single director structure leads to regulatory uncertainty and instability for consumers, industry, and the economy, leaving vital consumer financial protection subject to dramatic political shifts with each changing presidential administration,” the bank groups wrote in their letter.
Signatories included some of the biggest industry groups, including the American Bankers Association, the Financial Services Roundtable, the Consumer Bankers Association, and the National Association of Realtors.
Democratic leadership has opposed changes to the bureau.
But Republicans have noted that as the idea for the agency was being developed, some Democrats supported it as a commission along the lines of the Securities and Exchange Commission. Elizabeth Warren, the liberal Democratic senator who has led the defense of the CFPB, originally envisioned it as a commission in a 2007 article she wrote as a Harvard Law professor proposing the idea of an agency regulating credit cards, mortgages, and other financial products.
After President Trump’s election, however, Republicans have become divided over the idea of a commission. Some have advanced that a single director appointed by a Republican president would be able to more aggressively undo the new rules the agency has put in place than a bipartisan commission would be able to. A rewrite of the post-crisis rules passed by House Republicans this month would have changed the bureau to have just one director, serving at the discretion of the president.
That bill, however, isn’t expected to clear the Senate because of the Democratic filibuster. Industry lobbyists have been weighing what regulatory relief measures might be able to pass the Senate in a must-pass scenario, such as funding the government.
