WASHINGTON, D.C. — U.S. Senator Deb Fischer (R-Neb.) reintroduced on Jan. 11 legislation aimed at replacing the director of the Consumer Financial Protection Bureau with a five-member bipartisan board. The bill was introduced just as Congressional Democrats and state regulators pledged to defend the bureau against attacks from the Trump administration.
This is the third time Fischer has introduced a CFPB-restructuring bill; the Republican lawmaker having introduced similar legislation during each of the previous two congressional sessions. This time, Fischer introduced her bill — S. 105, or the Consumer Financial Protection Board Act — less than four months after a three- judge panel of the U.S. Court of Appeals ruled the bureau’s leadership structure unconstitutional and vacated its $109 million fine against mortgage lender PHH Corp.
“For years, the bad decisions made by a single director at the CFPB have kept families locked out of economic opportunity,” Fischer stated in her press release announcing the bill, which sits in the Senate Committee on Banking, Housing and Urban Affairs. “My bill would prevent this misconduct by divesting the authority from one director to a five-member bipartisan board. This much-needed structural adjustment would bring accountability to the bureau and give more Americans a chance to build their own businesses and provide for their families.”
Under S. 105, each board member would be appointed by the president and confirmed by the Senate. The president would also appoint one of the five members to serve as chairperson of the board, which would consist of no more than three members from the same political party. Each board member would serve staggered five-year terms.
If passed, the legislation, which lists Senators John Barrasso (R-Wyo.) and Ron Johnson (R-Wisc.) as cosponsors, would take effect once the Senate confirms three members.
Replacing the single CFPB director with a committee is also part of legislation Republicans in the House of Representatives introduced last September. That bill, also known as the Financial CHOICE Act of 2016, would also repeal and replace the Dodd-Frank Wall Street Reform Act, as well as repeal the CFPB’s March 2013 guidance on dealer participation.
Senators Charles Schumer (D-N.Y.), Sherrod Brown (D-Ohio), and Elizabeth Warren (D-Mass) threw their support behind CFPB Director Richard Cordray and his agency during a Jan. 17 press call. Rumors have circulated around Washington D.C., that President Donald Trump and his administration plan to fire the director and abandon the legal defense of the agency in its appeal of the federal appellate court’s October 2016 ruling. The Senate Democrats claim Cordray’s firing would go against Trump’s promise to keep Wall Street accountable.
Sen. Brown and Rep. Maxine Waters (D-Calif.) then filed on Jan. 23 a motion to intervene in the bureau’s appeal. Seventeen attorneys generals followed suit the same day.
The attorneys general from Connecticut, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Mississippi, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Washington, and the District Columbia are seeking to defend the constitutionality of the bureau. They argue that the federal appellate court’s ruling, if permitted to stand, would undermine the power of state attorneys general to effectively protect consumers against abuse in the consumer finance industry, as well as “significantly lessen the ability of the CFPB to withstand political pressure and act effectively and independently of the president.”
The regulators also argue that it’s critical they intervene in the case because President Trump has expressed strong opposition to the Dodd-Frank reforms that created the CFPB. “The CFPB is the cop on the beat, protecting Main Street from Wall Street misconduct,” said Attorney General George Jepsen, who led the group of regulators in their filing of the motion. “It was structured by Congress to be a powerful and independent agency that would protect consumers from the abuses of Wall Street, banks, and other large financial institutions. That mission is still critical to consumers today. However, the Trump Administration has said it intends to weaken the CFPB.
“That calls into question whether the new administration will adequately defend the CFPB and the American public it protects.”