The plan would also scale back the agency’s enforcement powers and prevent the agency from publishing its consumer complaint database, according to a memo from House Financial Services Committee Chairman Jeb Hensarling (R-Tex.) that was shared with lawmakers on Tuesday.
The revised strategy is more aggressive than Hensarling’s initial plan, which would have replaced the director with a bipartisan commission but allowed the CFPB to remain an independent agency. The new approach may not match the wishes of some members of the financial industry, who say that heading the agency with a bipartisan commission can lead to more stability in the long run.
“We are looking ten and twenty years ahead and need a balanced long-term approach,” said Richard Hunt, president of the Consumer Bankers Association, a trade group that represents the retail banking industry, in an email to The Washington Post. “A commission would help bring consistency and certainty to the industry.”
Hensarling will lay out the changes as part of a new version of his Financial CHOICE act, which is set to be released at the end of the month. The bill will focus on scaling back financial regulations enacted by the Dodd-Frank Act, which created the CFPB.
Hensarling, other Republicans and some in the financial industry have long tried to unseat CFPB director Richard Cordray before his term ends in July 2018. Critics of the agency want to rein in its ability to make rules and take enforcement actions.
At a hearing last week on Capitol Hill, Hensarling was not shy about his views on Cordray or the agency. “Richard Cordray should be dismissed by our president,” Hensarling said during the hearing. “Not only must Mr. Cordray go, but this CFPB must go as well.”
As part of Hensarling’s plan, the CFPB would be renamed as the Consumer Financial Opportunity Agency. The president would also be able to appoint and remove the agency’s deputy director.
In addition to the leadership changes, Hensarling’s bill would strip the agency of its power to enforce a law that bans companies from using “unfair” or “deceptive” practices. That would bar the agency from being able to take enforcement actions against some financial companies, similar to the high-profile actions taken
against companies such as Wells Fargo and student loan servicer Navient.
The bill would also block the CFPB from publishing its consumer complaint database, an online hub where consumers can write in about issues they face in dealing with financial companies, such as banks, debt collectors and credit card firms. Some critics of the database, which is sometimes used as a resource for prosecutors and attorneys, have said that the complaints should be verified before they are published.
As he did with his original financial reform bill, Hensarling would make the CFPB subject to the annual budget process, which would give Congress more oversight. Consumer advocates worry that change — which differs from the current structure of receiving funding directly from the independent Federal Reserve — could leave the agency with fewer resources to investigate companies and stand up for consumers.
“I’m concerned that this will overly politicize financial law enforcement,” said Rohit Chopra, a former CFPB executive and a senior fellow at the Consumer Federation of America, a nonprofit organization that advocates for consumers. “It also looks like a backdoor trick to starving the agency of its dedicated funding.”
In a meeting with chief executives on Tuesday, President Trump said his administration would still be looking to revise financial regulations. “We’re doing a major elimination of the horrendous Dodd-Frank regulations, keeping some obviously, but getting rid of many,” he told the business group, according to CNBC.
“Chairman Hensarling looks forward to working with the President and his administration to eliminate Dodd-Frank and replace it with the Financial CHOICE Act,” Sarah Rozier, a spokeswoman for Hensarling, said in a statement. “Our plan, which will be released in the next few weeks, is a bold and visionary plan that protects consumers by holding Wall Street and Washington accountable, ends bailouts, and unleashes America’s economic potential.” News of the bill was first reported by The Hill.