Three Republican Plans Take Swipe at CFPB

Republican lawmakers introduced three plans this week that look to limit or outright abolish the Consumer Financial Protection Bureau — the main regulatory arm overlooking auto lenders and other financial institutions.  

Texas Senator and former republican presidential candidate Ted Cruz, alongside Representative John Ratcliffe, introduced a one-page bill (S. 370 and H.R. 1031) with a simple message — abolish the CFPB and start over.  

“Don’t let the name fool you, the Consumer Financial Protection Bureau does little to protect consumers,” Cruz said in a statement. “During the Obama administration, the CFPB grew in power and magnitude without any accountability to Congress and the people, and I am encouraged by the actions President Trump has begun to take to roll back the harmful impacts of an out-of-control bureaucracy.””

Democrats fiercely defend the regulatory agency, often citing the $11 billion the CFPB has collected from companies on behalf of consumers.

Senator David Perdue (R-Ga.) also introduced a bill this week which would take a more modest approach to limit the bureau. The Consumer Financial Protection Bureau Accountability Act of 2017 would move the agencies funding to congressional oversight, rather than being independently funded by the Federal Reserve.

The newly confirmed Treasury Secretary Steven Mnuchin has also stated a support for changing the funding of the CFPB, Jack Ferry, vice president of communications at the American Financial Services Association, told Auto Finance News in a statement.

“During interviews and the hearings, Mnuchin noted his support for ensuring that credit access is maintained and also for increased lending and appropriate levels of regulation,” Ferry said. “Mnuchin stated that the biggest issue he has with the CFPB is that he does not believe it should be funded by the Federal Reserve, but instead through the congressional appropriations process to give it accountability, which AFSA fully supports.”

While Cruz’s bill of total abolition would require 60 votes in the senate, Perdue’s measure could pass with a simple majority and be tacked onto another existing bill. A dozen senators have already sponsored the Accountability Act of 2017 and it’s supported by American Bankers Association, the Taxpayers Protection Alliance, and the Credit Union National Association, The Hill reported.

Finally, the Financial Services Committee Chairman, Jeb Hensarling (R-TX) made a series of statements throughout the week reaffirming his strong dislike for the bureau, but didn’t take definitive sides on whether it should be outright abolished or just limited.

“We would be derelict in our duty if we didn’t do something about it,” Hensarling told CNBC. “And Senator Cruz’s plan is certainly a valid plan, and that is simply get rid of it and start over.”

The chairman also floated the idea of combining the duties of consumer protection into other agencies such as the Federal Trade Commission, Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, or the Federal Reserve.

However, with all the activity coming out of the new administration right now, it’s too soon to tell what will happen, Ferry and Kenneth Rojc, partner at Nisen & Elliott LLC, agreed.

“It’s a little premature because there are so many moving parts,” Rojc told AFN. “The house has attempted to pass numerous measures, but the key will be to see what happens in the senate.”