In offering the first look at a comprehensive Republican plan to promote economic growth by replacing the Dodd-Frank Act, House Financial Services Committee Chairman Jeb Hensarling (R-Tex) said that the Consumer Financial Protection Bureau “may arguably be the single most powerful and least accountable Federal agency in the history of our nation.” Similarly, the Republican plan to grow the economy cites the CFPB, which was created by the Dodd-Frank Act, as a notable example of a federal regulator run amok.
In a speech
before the Economic Club of New York, Hensarling sketched the contours of the
forthcoming Financial CHOICE Act, which he labeled a "new legislative
paradigm" for banking and the capital markets that will allow strongly
capitalized banks to opt-out of burdensome regulations, end too-big-to-fail,
and impose greater accountability on regulatory agencies. He pointed to the
creation of the CFPB as an unconstitutional outsourcing of legislative powers to
the executive branch, giving the CFPB Director the power to unilaterally
declare a mortgage, credit card, or bank account “unfair” or “abusive.”
The proposed legislation would change the name of the Consumer Financial Protection Bureau to the Consumer Financial Opportunity Commission (CFOC) and give it the dual mission of consumer protection and competitive markets, with a cost-benefit analysis of rules performed by an Office of Economic Analysis. The Republican reform plan would repeal the CFPB’s authority to ban bank products or services it deems "abusive" and its authority to prohibit arbitration. Indirect auto lending guidance would also be repealed.
The current single director would be replaced with a bipartisan, five-member commission, subject to congressional oversight and appropriations. In addition, an independent, Senate-confirmed Inspector General would be established. The Commission would be required to obtain permission before collecting personally identifiable information on consumers.
Speaker of the House Paul Ryan (R-Wis) has called for Washington to change the way it writes rules, including a vote by Congress before any major regulation becomes law. Ryan and a group of Republican leaders announced their plans to reduce regulatory burdens in a white paper called "A Better Way to Grow Our Economy."
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