Though Donald Trump and Republican lawmakers have it out for the Consumer Financial Protection Bureau, actually giving the regulator the ax may be much more daunting than expected.
According to Bloomberg, there are not only disagreements among Republicans about how to make a major change regarding the CFPB, but bankers are also putting up an unlikely but formidable opposition.
People familiar with the matter told Bloomberg that advisers of Trump’s transition are exploring different legal options to fire CFPB Director Richard Cordray and replace him with someone that can carry out dismantling the agency. Another strategy involves pushing legislation through Congress that could result in an overhaul of CFPB funding and essentially starve the agency of money.
But these aggressive tactics may not turn out exactly how Trump and many other Republicans are expecting.
Not only could these strategies alienate Democrats, but some Republican congressional aides and bank lobbyists believe they could also hurt chances of working with moderates on an eventual overhaul of the Dodd-Frank Act.
“There are all sorts of risks,” Iain Murray, VP of strategy at Competitive Enterprise Institute, told Bloomberg. “If a change in the CFPB director comes to symbolize the bigger fight over Dodd-Frank, there are going to be tradeoffs.”
While some lawmakers are ready to take a hardline against replacing Dodd-Frank and shaking up the CFPB, others prefer to seek modest, bipartisan deals.
However, many financial companies, who have spent a great deal of time and money over the years adhering to Dodd-Frank, would prefer Congress to alter the CFPB’s structure versus destroying it completely, Bloomberg said.
Either way, the battle is just beginning.
What is clear is that a change to the CFPB and how it operates is long overdue.
Economist David S. Evans, chairman of the Global Economics Group, recently pointed out that the fundamental problem with the CFPB isn’t who’s in charge but that the agency doesn’t have an institutional desire, or incentives, to ensure the financial services industry supplies consumers with products that consumers need, including loans.
“It is time for a reset. Time to recognize the importance of lending for consumers and small businesses and for making the economy go ‘round and ‘round. To recognize the valuable role financial service providers play in making loans for all sorts of reasons, for all kinds of people. And time to put the consumer back into consumer financial protection,” Evans said.