Commission Structure Only Way To Guarantee An Independent CFPB

February 15, 2017 | Consumer Credit Wire

In recent weeks, calls to reform the Consumer Financial Protection Bureau (CFPB) have come to a head. Proponents of CFPB reform have suggested numerous ways to restructure the Bureau to make it a more accountable and non-partisan federal agency, particularly by placing the Bureau under the leadership of a bipartisan commission subject to congressional appropriations.

Dennis Shaul, CEO of the Community Financial Services Association of America (CFSA), recently wrote in The Hill on the critical need for CFPB reform. He argued that when Congress created the CFPB, it was meant to be an independent, non-partisan agency set apart from political agenda and bias. However, Shaul believes the Bureau operates in an unaccountable, biased manner that has fully deviated from Congress' original intent, as well as its consumer-focused mission.

The only way to seriously reform the Bureau, Shaul writes, is to change the Bureau’s leadership structure into a bipartisan commission comprised of Democrats and Republicans and subject it to the congressional appropriations process. These reforms will “increase accountability and could serve as the ultimate check on its power,” Shaul says.

A number of prominent academics, trade groups, and policymakers agree with Shaul's assertion:

  • A joint letter from leading financial services industry trade groups, including the Consumer Bankers Association (CBA), Credit Union National Association (CUNA), Independent Community Bankers of America (ICBA), and National Association of Federal Credit Unions (NAFCU), pointed out that “[t]he CFPB is an independent regulatory agency that provides the sole director unprecedented authority over financial institutions, with minimal oversight.” They concluded that “the current single director structure leads to regulatory uncertainty for consumers, industry, and the economy. In contrast, a Senate confirmed, bipartisan board or commission will provide a balanced and deliberative approach to supervision, regulation, and enforcement over financial institutions that is more in keeping with other financial regulators.”
  • Susan Dudley, director of the George Washington University Regulatory Studies Center and former Administrator of the Office of Information and Regulatory Affairs (OIRA), Office of Management and Budget, noted that ”other federal regulatory bodies are established either as departments or agencies within the executive branch or as independent commissions,” and that ”while these multi-member independent regulatory commissions raise constitutional questions… the CFPB’s situation is even more troubling: not only can the President not control or remove the Bureau’s Director, but also Congress cannot cut or eliminate its budget.”
  • Research fellow Norbert Michel of the Heritage Foundation has called the single director structure a “bad idea” and said that ’the CFPB’s funding and structure – a formulaic revenue stream tied to the Federal Reserve, and a sole director rather than a bipartisan commission – were points of conflict before the Bureau was even up and running.” Under the single director, he continued, “any newly elected President could install a new CFPB director and undo his predecessor’s policies. That set up does not bode well for either side.”
  • Rep. Jeb Hensarling (R-TX), Chairman of the House Financial Services Committee, has said that ”by design the CFPB is arguably the most powerful and least accountable Washington bureaucracy in American history, and it shows.” Congressman Hensarling contends that replacing “the current unaccountable single director with a, five-member commission” would bring it in line with how most other regulatory agencies in the federal government work.

With a chorus of voices arguing that a bipartisan commission structure is the only way to guarantee an independent CFPB, it seems certain this debate has only just begun in Washington.


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