Organizations representing banks and credit unions have expressed support for a revived effort to replace the director of the Consumer Financial Protection Bureau with a five-member commission.
A bill to make that change, the "Financial Products Safety Commission Act," was introduced this week by Rep. Randy Neugebauer, who announced his plans to sponsor the legislation at a House Financial Services Committee hearing on Tuesday (March 3).
"We believe that a five-member commission, as Congress originally intended, will better balance consumer access to financial products with the need to ensure a fair marketplace," the bankers wrote in a letter on Wednesday (March 4). "In 2009, then-House Speaker Nancy Pelosi (D-CA), then-House Financial Services Committee Chairman Barney Frank (D-MA), and Ranking Member Maxine Waters (D-CA) led passage of legislation in the House with strong Democrat support to create a five-member commission to oversee the CFPB which is nearly identical to what your legislation proposes to do."
The letter continued, "A commission would serve as a source of balance and stability for consumers and the financial services industry by encouraging internal debate and deliberation, ultimately leading to increased transparency. Moreover, a commission will further promote CFPB’s ability to make bipartisan and reasoned judgments; will offer consumers the protection they deserve and the industry the certainty it needs, which in turn will help strengthen the economy; and will avoid the risk of politically motivated decisions, which could result in harm to consumers."
The letter was signed by the American Bankers Association, American Financial Services Association, Consumer Bankers Association, Credit Union National Association, Financial Services Roundtable, Independent Community Bankers of America, National Association of Federal Credit Unions, and U.S. Chamber of Commerce.
Neugebauer's proposal would replace the CFPB director with a bipartisan, five-member commission appointed by the president for five-year terms, with no more than three from a single political party. According to the draft legislation, the CFPB would also be renamed as the "Financial Product Safety Commission" and would no longer be part of the Federal Reserve, which currently provides the CFPB's funding.
Neugebauer's effort isn't the first to try to rein in the CFPB, which Republicans and bankers have complained can't be held accountable under its current structure. The House of Representatives passed a similar bill a year ago that was not taken up by the Senate, and last month Sen. Rob Portman revived legislation to give the CFPB an Inspector General to improve oversight.
(A previous version of this story reported that the renamed commission would no longer be funded by the Federal Reserve, but by its own budget appropriation. The draft bill does not specify a budget appropriation.)