Consumer Bureau Foe Maps Out a Plan for Its Destruction

Rep. Jeb Hensarling, R-Texas, wrote an op-ed mapping out his strategy for abolishing CFPB. Rep. Jeb Hensarling, R-Texas, wrote an op-ed mapping out his strategy for abolishing CFPB. Jacquelyn Martin / AP

Continuing his crusade against “the most powerful, least accountable agency in U.S. history,” House Financial Services Committee Chairman Rep. Jeb Hensarling, R-Texas, took to the op-ed page of the Wall Street Journal on Thursday with a tactical plan for shutting down the Consumer Financial Protection Bureau.

“CFPB zealots have the power to determine the ‘fairness’ of virtually every financial transaction in America,” he wrote of the independent regulator created by “the Democrat-dominated” 111th Congress in 2010.

 “The agency defines its own powers and can launch investigations without cause, imposing virtually any fine or remedy, devoid of due process,” Hensarling argued. “It requires lenders essentially to read their clients’ minds, know and weigh their clients’ comprehension levels, and forecast future risk. It can compel the production of reams of data and employ methodologies that ‘infer’ harm without finding any specific instance of harm or knowing violation.”

» Get the best federal news and ideas delivered right to your inbox. Sign up here.

Republicans have long bristled at the bureau’s funding that comes not from an appropriation but from the Federal Reserve, and at its one-person director exercising discretion to aid individual consumers against corporations rather than a five-member commission balanced between the political parties.

But now they have the power to put their plans into action. Last October the powerful U.S. Court of Appeals for the D.C. Circuit found the language in the 2010 Dodd-Frank Financial Reform law giving the president sole authority to appoint the consumer bureau’s director to be unconstitutional. President Trump’s arrival removes the threat of a veto over GOP plans.

“Since the CFPB’s advent, the number of banks offering free checking has drastically declined, while many bank fees have increased,” Hensarling wrote. Mortgage originations and auto loans have become more expensive for many Americans. President Trump should immediately fire CFPB Director Richard Cordray, citing the president’s constitutional responsibility to take care that the laws are faithfully executed. A new director could first undo all harmful actions taken by the CFPB during the Obama era.”

The next step? “The agency must be functionally terminated,” Hensarling said. “The Senate can achieve this with a simple majority vote. Dodd-Frank requires the Fed to fund all CFPB budget requests automatically—creating an estimated $6.6 billion funding stream over the next 10 years. Under a budget process known as reconciliation, the House Financial Services Committee, which I chair, and the Senate Banking Committee could be mandated to save $6.6 billion over 10 years of the budget. In the ensuing reconciliation bill the two committees could then direct the Fed to terminate CFPB funding. Senate Democrats could not filibuster the bill.”

Whatever consumer protection functions are still needed could be transferred to the Federal Trade Commission or traditional banking regulators, Hensarling said. “The CFPB has eroded freedom, trampled due process and killed jobs. It must go.”

The bureau’s press office did not respond to Government Executive requests for comment by publication time.

The Trump administration has not laid down its cards on the future of the CFPB. But Gary Cohn, the Goldman Sachs veteran newly installed as director of the White House National Economic Council, suggested in an interview with the Wall Street Journal last week that changes are in store because banks are upset.

Sen. Elizabeth Warren, D-Mass., widely regarded as the mother of the bureau before her election to the Senate, told a conference call of unions and consumer groups called Americans for Financial Reform on Jan. 11 that “Trump has surrounded himself with a team of billionaires and bankers” and that “big banks are salivating with the chance to gut the CFPB. They’re going to have a real fight on their hands.”

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Forecasting Cloud's Future

    Conversations with Federal, State, and Local Technology Leaders on Cloud-Driven Digital Transformation

    Download
  • The Big Data Campaign Trail

    With everyone so focused on security following recent breaches at federal, state and local government and education institutions, there has been little emphasis on the need for better operations. This report breaks down some of the biggest operational challenges in IT management and provides insight into how agencies and leaders can successfully solve some of the biggest lingering government IT issues.

    Download
  • Communicating Innovation in Federal Government

    Federal Government spending on ‘obsolete technology’ continues to increase. Supporting the twin pillars of improved digital service delivery for citizens on the one hand, and the increasingly optimized and flexible working practices for federal employees on the other, are neither easy nor inexpensive tasks. This whitepaper explores how federal agencies can leverage the value of existing agency technology assets while offering IT leaders the ability to implement the kind of employee productivity, citizen service improvements and security demanded by federal oversight.

    Download
  • IT Transformation Trends: Flash Storage as a Strategic IT Asset

    MIT Technology Review: Flash Storage As a Strategic IT Asset For the first time in decades, IT leaders now consider all-flash storage as a strategic IT asset. IT has become a new operating model that enables self-service with high performance, density and resiliency. It also offers the self-service agility of the public cloud combined with the security, performance, and cost-effectiveness of a private cloud. Download this MIT Technology Review paper to learn more about how all-flash storage is transforming the data center.

    Download
  • Ongoing Efforts in Veterans Health Care Modernization

    This report discusses the current state of veterans health care

    Download

When you download a report, your information may be shared with the underwriters of that document.