Congress Mulling Proposals to Curb, Abolish Consumer Financial Protection Bureau
On February 14, 2017, U.S. Senator Ted Cruz (R-TX) and Rep. John Ratcliffe (R-TX) introduced a bill in the House and Senate to abolish the CFPB.
Excluding its introductory language, the bill reads in full: “The Consumer Financial Protection Act of 2010 (12 U.S.C. 5481 et seq.) is repealed, and the provisions of law amended or repealed by that Act are restored or revived as if the Act had not been enacted.” The legislation is largely symbolic, given that Senate Democrats intend to filibuster major changes to the Consumer Financial Protection Bureau and given the practical challenges involved in deconsolidating the Bureau’s functions back to the Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Federal Trade Commission, the Department of Housing and Urban Development, and the National Credit Union Administration.
Nonetheless, the proposal—which has four Republican cosponsors in the Senate and seventeen in the House—reflects a growing appetite among certain members to change the Bureau in substantial ways.
The bill comes on the heels of a leaked February 6, 2017, memorandum circulated by House Financial Services Committee Chairman Jeb Hensarling (R-TX) to the Financial Services Committee Leadership Team outlining changes expected to be made to the soon-to-be-reintroduced Financial CHOICE Act. Along with a package of other revisions to the Dodd-Frank Act, the legislation outlined in the memorandum would dramatically reduce the CFPB’s role by eliminating the Bureau’s UDAAP authority, supervisory authority, research and consumer education functions, and consumer complaint database. It would also circumscribe the Bureau’s rulemaking and enforcement authority. Interestingly, the memorandum reverses the proposal in the most recent version of the CHOICE Act to replace the CFPB Director with a five-member bipartisan commission and would instead retain the single-director structure while allowing the President to replace the director at will.