Republicans kicked off an effort to limit the power of the Consumer Financial Protection Bureau this week, starting with a House bill to replace the bureau’s single director with a five-member commission.
Rep. Randy Neugebauer, a Texas Republican and chairman of the House Financial Services subcommittee overseeing consumer credit, introduced the legislation, which represents one of the goals for Republicans in scaling back the power granted to the new agency by the 2010 Dodd-Frank financial reform law. A five-member commission would make it similar to the Securities and Exchange Commission or the Commodity Futures Trading Commission.
Republicans also have expressed a desire to give it a dedicated inspector general and subject the bureau to congressional appropriations. It is currently funded by the independent Federal Reserve, depriving legislators of one form of control.
“Republicans have been consistent in their efforts to refocus and restructure the [Consumer Financial Protection Bureau] including replacing the single director with a five-person bipartisan commission, subjecting it to the congressional appropriations process, and creating a safety and soundness check,” said Adam Rice, a spokesman for Neugebauer, who was traveling Thursday after Congress closed because of a snowstorm in Washington. “Chairman Neugebauer’s bill would address one piece of a much-needed structural reform to bring transparency and accountability to the bureau,” Rice added.
The bill’s introduction came as House Republicans this week ramped up their ongoing campaign against the agency.
“The CFPB undoubtedly remains the single most powerful and least accountable federal agency in all of Washington,” Financial Services Committee Chairman Jeb Hensarling told bureau Director Richard Cordray Tuesday in a hearing.
“We need the CFPB on budget and led by a bipartisan commission,” Hensarling said.
The Republican-led House has previously passed legislation to overhaul the agency. What’s new this year is that Republicans also control the Senate. Senate Banking Committee Chairman Richard Shelby, R-Ala., has been a critic of the bureau since it was proposed by then-Harvard Law professor Elizabeth Warren.
Neugebauer’s bill received support this week from a range of financial industry groups, including ones representing banks, credit unions and businesses.
But the legislation is exactly what liberal groups fearful of the new GOP majorities have been raising alarms to try to prevent.
The progressive group CREDO Action has assembled 145,863 signatures for an online petition to stop Congress from passing legislation to “sabotage” the consumer bureau.
Last week, Americans for Financial Reform, a group that advocates strict regulations on financial firms, and 340 other consumer, union, and progressive groups sent a letter to lawmakers asking them not to support the GOP’s favored overhauls of the agency.
The groups touted the $4.6 billion-plus the bureau says it has won back for consumers from companies engaging in illicit financial business.
They warned specifically that “five-member boards tend to increase gridlock. … Having a strong director at the helm of the agency is vital in ensuring that the CFPB can effectively implement critical reforms to protect consumers, lower the risks of incurring another financial and housing crisis, and level the playing field between banks and non-banks.”
Nevertheless, Neugebauer and others have noted that Democrats in the past have supported creating the five-member commission, which they say will increase the bureau’s accountability to the private sector and Congress.
In her earliest proposals for an agency such as the CFPB in 2007 and 2008, Warren described her plan as a Financial Product Safety Commission, comparing it to the Consumer Product Safety Commission, which has a five-member board. In early drafts of legislation introduced during the financial crisis, liberal lawmakers such as Sen. Dick Durbin, D-Ill., and Rep. Barney Frank, D-Mass., envisioned the consumer agency as a commission.
Nevertheless, any legislative overhaul faces daunting odds in the Senate, where Warren and other fierce critics of almost all attempts to change Dodd-Frank will force Republicans to find a way around a filibuster. President Obama, as well, has threatened vetoes of bills that would roll back Dodd-Frank.
