Is the Leadership of the CFPB about to Change?
Large organizations that represent banks and other lenders have shown support for a new effort that is set to replace the standing director of the Consumer Financial Protection Bureau with a new five-member committee. The bill to make the change, called the Financial Products Safety Commission Act, was recently introduced to the House by Representative Randy Neugebauer. Rep. Neugebauer announced his plans to sponsor this bill at the March hearing of the House Financial Services Committee.
The organization of bankers wrote a letter in March that said, “We believe that a five-member commission, as Congress originally intended, will better balance consumer access to financial products with the need to ensure a fair marketplace. In 2009, then-House Speaker Nancy Pelosi (D-CA), then-House Financial Services Committee Chairman Barney Frank (D-MA), and Ranking Member Maxine Waters (D-CA) led passage of legislation in the House with strong Democrat support to create a five-member commission to oversee the CFPB which is nearly identical to what your legislation proposes to do.”
The letter from the bankers continued with, “A commission would serve as a source of balance and stability for consumers and the financial services industry by encouraging internal debate and deliberation, ultimately leading to increased transparency. Moreover, a commission will further promote CFPB’s ability to make bipartisan and reasoned judgments; will offer consumers the protection they deserve and the industry the certainty it needs, which in turn will help strengthen the economy; and will avoid the risk of politically motivated decisions, which could result in harm to consumers.”
This letter was officially signed by the American Financial Services Association, the American Bankers Association, the Consumer Bankers Association, the Financial Services Roundtable, the Credit Union National Association, the U.S. Chamber of Commerce and the National Association of Federal Credit Unions.
The proposal from Neugebauer would ultimately replace the director of the CFPB with a five member council of bipartisan representatives. The members of the council would have five year terms, and no more than three allowed from a single party. The legislation states that the CFPB would be renamed as the Financial Product Safety Commission, and would not be a part of the Federal Reserve in the future. To date, the Federal Reserve has been providing all funding for the CFPB.
The underlying theme of Neugebauer’s proposal is to get the CFPB under control. Republicans have complained in the past that the bureau is not accountable at all under the current leadership structure. The House of Representatives passed a bill similar to this one just over a year ago, but it was not taken up by the Senate. Just last month, Senator Rob Portman took up the cause of this legislation to help improve oversight at the CFPB. It seems that one political official after another is coming to the realization that the CFPB is out of control, and some would say, completely out of line with some of its practices. It is not often that we get a chance to see our elected officials taking up a cause that will actually prove to be helpful to hard working families and legitimate business owners. The CFPB has already done damage to many legitimate industries and has tried its hardest to cut off crucial financial services to some of the most disenfranchised households in the United States. Consumers should keep their fingers crossed that this new legislature continues to gain support and results in some major changes at the CFPB very soon. The CFPB, like other governmental agencies, has to learn that it is accountable to the people that it is supposed to be working for.