For CFPB, Win A Battle, Lose The War?

CFPB regulation

The Consumer Financial Protection Bureau will not be able to spend much time savoring its victory against Wells Fargo and the huge $185 million settlement against the banking giant levied earlier this month.

Reuters reported that there’s a larger battle looming, one forcing the agency to “justify its own existence.”

With ambition aplenty, the CFPB has been setting sights on examining the efficacy of regulations (and proposing new ones) on any number of industries and lending, from autos to payday loans to mortgages. But in Congress, there exists what the newswire has termed a “philosophical debate abut the value and limits of regulation.” And the debate does not stop at the halls of Congress. One salvo that can help determine the ultimate path for the CFPB is slated to come next week, as a U.S. court could hand down a ruling focused on whether the bureau’s single-director structure is unconstitutional. That could auger change of the very makeup of how the agency is run. A defendant in a case over mortgage service practices, PHH, has said that the very makeup of the CFPB is unconstitutional because that single director is not answerable to Congress or to the president.

Other CFPB flanks that are being attacked by lawmakers include the reach of the agency itself. This past week, the House of Representative’s Financial Services Committee approved legislation (albeit in its early stages) that would cut CFPB powers and also bring its money appropriations process to Congress, rather than the Federal Reserve. The newswire reported that the CFPB is continuing with efforts to ban forced arbitration clauses of the type that are ubiquitous in financial contracts.


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