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Trade Groups Push Senate on CFPB Restructuring

Phil Hall
Dec 08, 2016
It is only the first working day of the new year, but the Consumer Financial Protection Bureau (CFPB) has wasted no time launching into enforcement actions

A quartet of leading financial services industry trade groups is urging U.S. Senate leaders to pass legislation that would restructure the Consumer Financial Protection Bureau (CFPB) away from its current set-up with a powerful director to a five-person bipartisan board during the new Congress that will begin in January.

“The current single director structure leads to regulatory uncertainty for consumers, industry, and the economy,” said the groups said in a letter sent to Senate Majority Leader Mitch McConnell (R-KY) and Senate Minority Leader-Elect Chuck Schumer (D-NY). “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.”

The trade groups also cited sense of uncertainty stemming from an ongoing court case that has raised legal questions on whether the current CFPB leadership structure is constitutional—the CFPB is appealing the decision, but there remains the possibility that President-Elect Trump could attempt to remove CFPB Director Richard Cordray from office before the appeal decision is announced.

“The 2016 presidential election and the recent D.C. Circuit Court Case, PHH Corp. v. CFPB have clearly demonstrated a sole director leadership model is fragile, uncertain, and leads to instability at the Bureau,” the trade groups wrote. “In PHH, the appellate court found the CFPB is ‘unconstitutionally structured’ due to the fact the sole director can be removed only for cause by the president, stating this is a ‘gross departure from settled historical practice.’ Put simply, the D.C. Circuit Court held the president may remove the director at will. This result makes it even more apparent what a whipsaw effect the single director model presents, inhibiting the ability for financial institutions to plan for the future, which in turn limits economic growth and hurts consumers.”

The trade groups that created the letter to the Senate leaders are the Consumer Bankers Association, the Credit Union National Associations, the Independent Bankers Association of America and the National Association of Federal Credit Unions. 

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