U.S. Representative Randy Neugebauer (R-Texas) introduced a bill this week intended to replace the director of the Consumer Financial Protection Bureau (CFPB) with a five-member commission. He announced his plan to support legislation in his testimony at a House Financial Services Committee (HFSC) hearing held on Tuesday, March 3.
“As we approach the five year anniversary of the Dodd-Frank Act, which created the CFPB, now is a good time to reflect on the Bureau’s impact on the American consumer,” said Neugebauer, who will be the keynote speaker at the Five Star Government Forum in Washington, D.C. on March 18. “Over the last several years, the Bureau’s actions and record have proven it can’t function in a sustainable manner. Perhaps, more than any other Washington agency, the CFPB has demonstrated a lack of transparency and a lack of accountability. It has proven it is susceptible to political influence – bringing into question its independence. This is all the more troubling because the Bureau has an important mission: to protect consumers.”
HFSC Committee Chairman Jeb Hensarling (R-Texas) warned of the overreach of the CFPB in his opening statement at Tuesday’s hearing and showed support for a five-member committee.
“The CFPB undoubtedly remains the single most powerful and least accountable Federal agency in all of Washington. When it comes to the credit cards, auto loans and mortgages of hardworking taxpayers the CFPB has unbridled, discretionary power not only to make those less available and more expensive, but to absolutely take them away,” Hensarling said. “Consequently, Americans are losing both their financial independence and the protection of the rule of law.”
Neugebauer’s proposal would replace the CFPB director with a bipartisan, five-member commission appointed by the president for five-year terms, with no more than three from a single political party. According to the draft legislation, the CFPB would also be renamed as the “Financial Product Safety Commission” and would no longer be funded by the Federal Reserve, but by its own budget appropriation.
“The Bureau is fundamentally unaccountable to the president since the director can only be removed for cause. Fundamentally unaccountable to Congress because the Bureau’s funding is not subject to appropriations,” Hensarling said. “Fundamentally unaccountable to the courts because Dodd-Frank requires courts to grant the CFPB deference regarding its interpretation of federal consumer financial law. Thus, the Bureau regrettably remains unaccountable to the American people. That is why we need the CFPB on budget and led by a bipartisan commission; mere testimony is not the equivalent to accountability.”
Credit unions and organizations representing banks have expressed support for the bill as well. A letter signed by the American Bankers Association, American Financial Services Association, Consumer Bankers Association, Credit Union National Association, Financial Services Roundtable, Independent Community Bankers of America, National Association of Federal Credit Unions, and U.S. Chamber of Commerce spoke of their shared belief in Neugebauer’s plan.
“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,” the bankers wrote in a letter on Wednesday. “In 2009, then-House Speaker Nancy Pelosi, then-House Financial Services Committee Chairman Barney Frank, and Ranking Member Maxine Waters 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.”
A similar bill was introduced in the House a year ago but it failed in the Senate. Last month, Senator Rob Portman (R-Ohio) revived legislation that would appoint an independent Inspector General to the CFPB in hopes to improve oversight. Representatives Steve Stivers (R-Ohio) and Tim Walz (D-Minnesota) revived a similar bill last month in the House.
(Editor's note: The Five Star Institute is the parent company of The MReport and theMReport.com)