The criticism in the Education Department letter echoes ongoing charges from other administration officials, congressional Republicans and the financial services industry that the agency and its director, Richard Cordray, operate with too much power and too little oversight.
And as lawmakers are resuming their work in Washington this week following their month-long recess, multiple pieces of legislation are on the table that would address critics’ concerns by reining in the CFPB’s power.
Among them is the Financial Choice Act, which the House passed in July. The bill would end the CFPB’s rulemaking ability and allow its director to be fired at will (currently disallowed), among other provisions. Whether the Senate would have the required 60 votes to pass it is questionable.
“It’s too controversial,” said Alan Kaplinsky, a partner with national law firm Ballard Spahr. “It would make dramatic changes to the CFPB, and Democrats simply aren’t going to support it.”
Awaiting Senate Action
H.R. 10 (Financial Choice Act)
This bill, which aims to gut many parts of the Dodd Frank financial reform bill of 2010, would also strip the CFPB of its rulemaking ability and make it an enforcement agency, allow the president to fire the agency’s direct with or without cause, end its authority to supervise and examine financial institutions and let Congress decide the agency’s funding, among other provisions.
H.J. Resolution 111
This joint resolution nullifies a new CFPB rule that bans financial firms from including mandatory arbitration clauses in customer agreements. The rule, scheduled to take effect Sept. 18, would make it easier for consumers to band together in class-action lawsuits.
In addition, the House also passed a resolution in July to kill a new rule issued by the CFPB that bans financial firms like banks or credit card companies from including mandatory arbitration clauses in customer agreements. The rule, scheduled to take effect Sept. 18, would make it easier for wronged consumers to band together in class-action lawsuits.
While the fate of the resolution is unclear, Kaplinsky said it has a better chance than the Financial Choice Act of getting Senate approval because it only requires a majority vote vs. the 60 required with legislation.
“Right now there are three or four Republican senators who are undecided or haven’t said which way they’ll vote,” said Kaplisnky, who co-chairs his firm’s consumer financial services group and blogs about the CFPB.
Republican disdain for the agency has persisted since it was created by the Dodd-Frank Act financial reform bill of 2010. Yet public opinion could stand in the way of the GOP kneecapping the agency despite the party’s hold on both chambers of Congress and the White House.