CFPB Battle Heats Up on Multiple Fronts

Opponents and supporters are drawing battle lines in a struggle over the Consumer Finance Protection Bureau, with the furor over the already-embattled agency only growing after the 2016 election.

Massachusetts Attorney General Maura Healey announced this week that she was joining a coalition of 16 other attorneys general to intervene in a federal appeals court case concerning the constitutionality of the CFPB.

The case in question, PHH Corporation v. Consumer Financial Protection Bureau, saw the court vacate a $103 million fine the bureau imposed on PHH and further ruled that restrictions on the president’s ability to remove the bureau’s director were unconstitutional. The bureau filed a petition for rehearing of the decision before the entire D.C. Circuit, and that petition is currently pending before the court.

The argument has coalesced into larger questions regarding the bureau’s continued existence in 2017 and beyond, with lawmakers at all levels of government taking aim at it and its director, Richard Cordray.

“The CFPB has been a critical partner to Massachusetts in protecting students, homeowners, the elderly, veterans and all consumers against unfair, deceptive and abusive financial practices and products,” Healey said in a statement released Tuesday. “My office and other states are joining together to protect the new consumer agency and the Wall Street Reform Act because the Trump administration has made it clear that it intends to weaken the agency.”

The attorneys general of Connecticut, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Mississippi, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Washington and the District of Columbia joined Healey in arguing the court’s ruling, if allowed to stand, would undermine the power of state attorneys general to protect consumers against abuse in the consumer finance industry and would significantly weaken the bureau’s independence from political pressure and the president.

Meanwhile, Sen. Deb Fischer (R-Nebraska) filed a bill to amend the Consumer Financial Protection Act of 2010 to change the bureau’s leadership from a single director to a five-person bipartisan board of directors.

Fischer introduced a similar bill in 2014, which was referred to the Committee on Banking, Housing, and Urban Affairs but went no further.

“The CFPB has an enormous amount of influence impacting all sectors of our economy and every consumer nationwide,” Fischer said in 2014 after introducing that bill. “Decisions governing such a powerful agency should reflect input from all sides, rather than placing broad regulatory authority in the hands of a single unelected official with little oversight from Congress.”

The American Bankers Association expressed their support for Fischer’s bill, calling CFPB reform a key element in their 2017 Blueprint For Growth.

“Well-intentioned but overly prescriptive regulation, along with overzealous enforcement, can be counter-productive, inhibiting banks’ ability to offer products and services that their customers want and need,” said the ABA in their blueprint. “Policies must strike the right balance between ensuring fundamental standards are met and offering providers flexibility to meet the specific needs of their clients, customers and communities.”