House Financial Services Looks at CFPB Changes

Jun 11, 2018 | News

In a hearing last week convened by the House Financial Services’ Financial Institutions and Consumer Credit Subcommittee, members of Congress on the panel considered four statutory changes to the structure of the Consumer Financial Protection Bureau (CFPB). The changes, requested by CFPB Acting Director Mick Mulvaney, were requested in the Bureau’s semi-annual report to the president and Congress on April 2.

The first change Mulvaney requested was to fund the Bureau through Congressional appropriations, giving Congress more oversight via the power of the purse. As it currently stands under the Dodd-Frank law, the CFPB gets funding from the Federal Reserve system, up to specific caps set by the law. These caps are fixed percentages of the Fed’s operating expenses. This was an intentional design of the Dodd-Frank legislation that aimed to keep the CFPB independent and guarantee funding levels to ensure a hostile Congress could not interfere with the Bureau’s mission by cutting or otherwise directing its funding.

The second recommendation similarly aims to give Congress more oversight by requiring legislative approval of major CFPB rules. As it currently stands, the Bureau has broad rulemaking authority to oversee the financial industry, with the ability to create and implement policy without Congressional direction.

Mulvaney also requested that the CFPB director answer to the president in the exercise of executive authority and that the Bureau create an independent Inspector General for the agency.

If implemented, all four of these changes would greatly diminish the CFPB’s role as an independent agency and cede or subject much of the Bureau’s regulatory authority back to Congress.

In his introduction to the report, Mulvaney criticized the agency he oversees, saying “As has been evident since the enactment of the Dodd-Frank Act, the Bureau is far too powerful, and with precious little oversight of its activities. Per the statute, in the normal course the Bureau’s Director simultaneously serves in three roles: as a one-man legislature empowered to write rules to bind parties in new ways; as an executive officer subject to limited control by the President; and as an appellate judge presiding over the Bureau’s in-house court-like adjudications.”

He further justified his proposed changes to the CFPB’s structure, writing “by structuring the Bureau the way it has, Congress has established an agency primed to ignore due process and abandon the rule of law in favor of bureaucratic fiat and administrative absolutism.”

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