Consumer Bureau Foe Maps Out a Plan for Its Destruction

Continuing his crusade against “the most powerful, least accountable agency in U.S. history,” House Financial Services Committee Chairman Rep. Jeb Hensarling, R-Texas, took to the op-ed page of the Wall Street Journal on Thursday with a tactical plan for shutting down the Consumer Financial Protection Bureau.

“CFPB zealots have the power to determine the ‘fairness’ of virtually every financial transaction in America,” he wrote of the independent regulator created by “the Democrat-dominated” 111th Congress in 2010.

 “The agency defines its own powers and can launch investigations without cause, imposing virtually any fine or remedy, devoid of due process,” Hensarling argued. “It requires lenders essentially to read their clients’ minds, know and weigh their clients’ comprehension levels, and forecast future risk. It can compel the production of reams of data and employ methodologies that ‘infer’ harm without finding any specific instance of harm or knowing violation.”

Republicans have long bristled at the bureau’s funding that comes not from an appropriation but from the Federal Reserve, and at its one-person director exercising discretion to aid individual consumers against corporations rather than a five-member commission balanced between the political parties.

But now they have the power to put their plans into action. Last October the powerful U.S. Court of Appeals for the D.C. Circuit found the language in the 2010 Dodd-Frank Financial Reform law giving the president sole authority to appoint the consumer bureau’s director to be unconstitutional. President Trump’s arrival removes the threat of a veto over GOP plans.

“Since the CFPB’s advent, the number of banks offering free checking has drastically declined, while many bank fees have increased,” Hensarling wrote. Mortgage originations and auto loans have become more expensive for many Americans. President Trump should immediately fire CFPB Director Richard Cordray, citing the president’s constitutional responsibility to take care that the laws are faithfully executed. A new director could first undo all harmful actions taken by the CFPB during the Obama era.”

The next step? “The agency must be functionally terminated,” Hensarling said. “The Senate can achieve this with a simple majority vote. Dodd-Frank requires the Fed to fund all CFPB budget requests automatically—creating an estimated $6.6 billion funding stream over the next 10 years. Under a budget process known as reconciliation, the House Financial Services Committee, which I chair, and the Senate Banking Committee could be mandated to save $6.6 billion over 10 years of the budget. In the ensuing reconciliation bill the two committees could then direct the Fed to terminate CFPB funding. Senate Democrats could not filibuster the bill.”

Whatever consumer protection functions are still needed could be transferred to the Federal Trade Commission or traditional banking regulators, Hensarling said. “The CFPB has eroded freedom, trampled due process and killed jobs. It must go.”

The bureau’s press office did not respond to Government Executive requests for comment by publication time.

The Trump administration has not laid down its cards on the future of the CFPB. But Gary Cohn, the Goldman Sachs veteran newly installed as director of the White House National Economic Council, suggested in an interview with the Wall Street Journal last week that changes are in store because banks are upset.

Sen. Elizabeth Warren, D-Mass., widely regarded as the mother of the bureau before her election to the Senate, told a conference call of unions and consumer groups called Americans for Financial Reform on Jan. 11 that “Trump has surrounded himself with a team of billionaires and bankers” and that “big banks are salivating with the chance to gut the CFPB. They’re going to have a real fight on their hands.”