House Committee to Consider CFPB Overhaul Measure

Bill would shift bureau from single director to commission and subject agency to appropriations process.

The House Financial Services Committee on Wednesday will consider draft legislation that would overhaul operations of the CFPB—a measure that has virtually no chance of being enacted in its current form.

The bill, which has not yet been introduced in the House, is a compilation of seven separate bills that would make the CFPB “more transparent and accountable to Congress and the American people,” according to a memo prepared by the committee’s staff.

What Is in the Legislation?

The bill’s main provisions would convert the CFPB from an agency run by a single director to a five-member commission, with members nominated by the president and confirmed by the Senate, as well as make the agency subject to the annual appropriations process.

The U.S. Supreme Court is considering whether the current funding structure of the agency is constitutional. The bureau is now funded by the Federal Reserve.

During the same meeting, the Financial Service Committee is scheduled to mark up 14 other measures dealing with capital formation and further issues unrelated to the CFPB.

If the past is any indication, the CFPB legislation is likely to be approved by the committee on a party line vote. If it goes to the House floor, it could also be passed by the Republican majority.

Then, it most likely will die.

It is virtually certain that the Senate Banking Committee, led by Sen. Sherrod Brown, D-Ohio—a supporter of the CFPB—would not consider it and that it never would reach the Senate floor.

Nonetheless, the House committee is scheduled to consider the measure, which, among other things would:

–Create a dedicated Inspector General for the agency; the CFPB now shares an Inspector General with the Federal Reserve.

–Create a new Office of Economic Analysis, which would be charged with preparing a cost-benefit analysis for all guidance or rules issued by the agency.

–Create a whistleblower program at the CFPB.

Backstory

The proposal to change the CFPB’s funding might become necessary, depending on how the Supreme Court rules in a case filed against the agency by the Community Financial Services Association of America (CFSA). The group, which represents payday lenders, sued the CFPB, contending that its payday loan rule was unconstitutional because the agency was not funded through the annual appropriations process.

The Fifth Circuit Court of Appeals ruled in the CFSA’s favor; the CFPB asked the Supreme Court to consider the case, which it has agreed to hear this fall. Meanwhile, the Second Circuit Court of Appeals issued a conflicting decision—ruling that the agency’s funding mechanism is constitutional.

Credit Union Reaction

During a call with reporters Monday, Brad Thaler, NAFCU’s vice president of legislative affairs, said he does not expect any major CFPB legislation until the high court issues its decision.

“The Supreme Court could begin the debate or end the debate,” he commented.

And discussing the CFPB bill to be considered by the Financial Services Committee Wednesday, Thaler said, “We don’t see this going anywhere.”