Republicans Look To Weaken CFPB’s Power, But Face Tough Opposition From Democrats

Ever since the Dodd-Frank Act gave the Consumer Financial Protection Bureau (CFPB) jurisdiction over just about every US business that provides some form of consumer credit, Republicans have been complaining that the agency has too much power.

“Ending the bureaucratic nightmare that is Dodd-Frank . . . is imperative,” said Jeb Hensarling, the Republican chairman of the House financial services committee. “America has struggled for too long.”

According to Financial Times, some of Hensarling’s proposed reforms include stripping the bureau of its supervisory powers, making its complaints database private and creating an inspector general to watch over it, appointed by the president. He also wants to remove the special funding status that gives the bureau an automatic handout each year from the central bank, rather than competing in the regular budget appropriations process.

The new entity — renamed the Consumer Law Enforcement Agency — would end up looking like the Federal Trade Commission, Mr Hensarling said: “responsible for actually enforcing the . . . consumer protection laws written by Congress, instead of making up its own law in an unfair, deceptive and abusive manner.”

Most bankers support moves to rein the CFPB in a bit. Brent Beardall, president and chief executive of Seattle-based Washington Federal, one of 90 or so banks with more than $10 billion in assets overseen by the CFPB, says he welcomes curbs on the bureau’s “superpowers,” adding that it appears to be ignoring obvious abuses from non-banks in online lending and payday lending. “They’re far too focused on the minutiae, in the weeds,” he says.

But several incumbent Democratic senators are facing tough fights for re-election in 2018, so they are likely to come out strongly for the bureau since most of their voters support it. After all, any action to weaken an agency that has returned nearly $12 billion to the pockets of 29 million Americans will be “a tough sell”, says Ian Katz, a political analyst at Capital Alpha Partners in Washington.


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