House Republicans on Thursday passed a sweeping legislative package to replace the Dodd-Frank financial reform law. Now, the strategizing begins in earnest to figure out which provisions could actually become law, and Republicans cited one top goal: Overhauling the Consumer Financial Protection Bureau.
Surveyed Thursday about their priorities among the individual components of the legislation, the Financial Choice Act, Republicans on the House Financial Services Committee cited different items based on their personal interest, but they all made clear that they want to curb the power and discretion of the consumer bureau.
That is a goal for which there is significant GOP support in the Senate and White House.
“The action on the substance of the Choice Act moves to the Senate,” Rep. Jeb Hensarling said amid a scrum of reporters and his two children following the House’s vote to approve his legislation.
Among House Republicans, antipathy to the Consumer Financial Protection Bureau runs hot, even as it is the part of the Dodd-Frank law most often touted by Democrats.
The GOP argues that the agency, which oversees financial products such as mortgages, credit cards and student loans, violates the separation of powers.
Democrats created the bureau in the 2010 law based on an idea from then-law professor Elizabeth Warren. They set it up to get funding through the Federal Reserve, so Congress wouldn’t control it through its purse strings. It is run by a single director, Obama appointee Richard Cordray, who the president cannot dismiss without cause, although the constitutionality of that setup is under review in a federal appeals court.
Democrats are pleased with the results. They frequently tout the $12 billion the agency has returned from financial firms to consumers, and argue that new rules on mortgages will help prevent rip-offs and future crises.
Republicans disagree.
“Reforming the CFPB would go further than anything else in there,” said Rep. Barry Loudermilk of Georgia, a member of the Financial Services Committee.
“This is a tyrannical organization, without control and without constraint,” Loudermilk said.
The Choice Act would not outright abolish the CFPB, as some in the caucus want, but instead, take several steps to rein it in.
The president could fire the director at will. Its funding would come through Congress. And it would no longer be able to write rules regulating entire industries, but instead, be tasked with enforcing existing consumer laws.
Those steps would transform it from being an “anti-business Gestapo,” Loudermilk said.
Any one of those reforms would be tough to get through the Senate, where Sen. Mike Crapo, the chairman of the Banking Committee, must find eight Democratic “yes” votes to avoid a filibuster.
Some Republicans believe that with 10 Democrats up for election in 2018 in states President Trump won, pressure from the White House could win over the necessary votes. So far, however, Senate Democrats have not sided with Trump on votes that are traditionally bipartisan, such as the vote to install Neil Gorsuch on the Supreme Court.
Crapo responded to Thursday’s vote with mild praise, saying that “many of the provisions in this legislation are responses to the failures and consequences of Dodd-Frank” and praising the “move away from government micromanagement.”
If Senate Democrats can’t be moved, however, Republicans could seek to make changes to the CFPB through the budget process known as reconciliation. Through reconciliation, legislation can clear the Senate with only 51 votes.
It’s an idea with support from key senators, such as Pat Toomey of Pennsylvania, a fiscal conservative. Trump’s fiscal 2018 budget, too, proposed defunding the bureau.
Yet there are difficulties with the idea of defunding or changing the agency through reconciliation because the procedure imposes certain restrictions on legislation that can be passed.
Nevertheless, many Republicans want to find a way to enact changes to the agency. “It needs to be brought under control. They need to have a budget. It needs to be much more consumer-friendly than an enemy of the consumer,” said Rep. Roger Williams of Texas.
Rep. Steven Pearce, who represents the southern part of New Mexico, said the bureau’s rules on mortgages have crimped lending for manufactured housing, which makes up half of the homes in his district. “CFPB reform would start opening up those lines of credit,” he said.
