The Consumer Financial Protection Bureau’s independent director could be replaced by a political appointee if the chairman of the House Financial Service Committee gets his way.
Rep. Jeb Hensarling (R-Texas) is going after the bureau’s leadership structure and wants to eliminate much of its regulatory powers, according to a memo on an updated version of the Financial Choice Act circulated among Republican lawmakers and obtained by Bloomberg BNA.
The memo says the CFPB would be revamped as a “civil law enforcement agency” that wouldn’t collect consumer complaints or conduct research. Earlier this week, Hensarling had called on President Donald Trump to fire CFPB Director Richard Cordray.
The changes outlined in the memo are billed as “additional restrictions” on the CFPB. The original version of the bill, which was approved by Hensarling’s committee in 2016, would have required the bureau to get consumers’ permission before collecting financial information, repealed its auto lending guidance and reduced its enforcement powers against “abusive” practices.
The revised version would eliminate the bureau’s authority to educate consumers, ban abusive practices and monitor markets, according to the memo.
Democrats have vowed to protect the CFPB. “This new version of the Chairman’s Wrong Choice Act is even worse than the original,” Rep. Maxine Waters (D-Calif.) told Bloomberg BNA through a spokeswoman. “This bill makes it crystal clear that Republicans mean to disarm our consumer protections, expose the American public to financial predators, and ultimately steer us in the direction of another Great Depression.”
The political appointee director structure sharply diverts from previous proposals to turn the CFPB into a bipartisan, five-member commission, similar to the Securities and Exchange Commission. The commission proposal, which was in the original Choice Act, had backing from industry groups and some Republican lawmakers.
A Hensarling spokesman didn’t respond to a request for comment.
Hensarling also proposed terminating the CFPB’s funding using the budget-reconciliation process and moving its consumer protection functions to the Federal Trade Commission or banking regulators, in an op-ed published Feb. 8 in the Wall Street Journal.
Committee Republicans have said the panel will mark up the new version, once introduced, sometime in February. The Senate is likely to move more slowly amid Democratic opposition.
“The Hensarling proposal would transform the bureau from an effective watchdog into a toy poodle—nice enough if that’s your taste, but not very useful,” Sen. Sherrod Brown (D-Ohio), ranking Democrat on the Senate Banking Committee, said in a news release. “They have taken a bad bill and made it even worse.”
Senate Banking Committee Chairman Mike Crapo (R-Idaho) hasn’t revealed his agenda for legislative changes to the CFPB or other parts of the Dodd-Frank Act, but he told reporters earlier in February that he has spoken with Hensarling.
To contact the reporter on this story: Rob Tricchinelli in Washington at firstname.lastname@example.org
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