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News

Advocates, detractors S.370 calls for eliminating

at odds over CFPB alternative consumer protections.
the CFPB but does not offer

Feb. 16, 2017, ruling by the U.S. Court of H.R.1031 was issued without any
Appeals for the District of Columbia Circuit text other than its title.
granted the Consumer Financial Protection
A Bureau the right to appeal an earlier decision
by the court against the government agency. The court had
ruled the bureau's very existence was in violation of the for some time now, I'm optimistic at our renewed chances
U.S. Constitution. Established as part of 2010 Dodd-Frank of advancing this effort with a willing partner in the White
Act, the CFPB has broad authority to enforce financial House."
laws. Its autonomy and potential for legislative overreach
has been a matter of concern on Capitol Hill. Division, revision of power
S.370 calls for eliminating the CFPB but does not offer
In April 2016, PHH Corp. and concerned parties challenged alternative consumer protections. H.R.1031 was issued
the CFPB's constitutionality. The petitioners alleged the without any text other than its title: "To eliminate the
CFPB and select government entities such as the Federal Bureau of Consumer Financial Protection by repealing title
Communications Commission "collectively constitute a X of the Dodd-Frank Wall Street Reform and Consumer
headless fourth branch of government." Its power and Protection Act, commonly known as the Consumer
lack of presidential supervision, poses a "significant threat Financial Protection Act of 2010."
to individual liberty and to the constitutional system of
separation of powers and checks and balances," plaintiffs Before the CFPB's inception, consumer protection was a
stated. They cited a $109 million order by the CFPB against collective effort of disparate government agencies with
PHH Corp. as an example of legislative overreach. differing levels of authority. "It's hard to imagine how
repealing the CFPB would cut back on bureaucracy, when
"In seeking to vacate the order, PHH argues that the you consider how many agencies were formerly responsible
CFPB's status as an independent agency headed by a single for consumer protection," said a financial analyst familiar
Director violates Article II of the Constitution," plaintiffs with the proceedings. "In fact, one of CFPB's biggest
stated. The court ruled in their favor in October 2016, but benefits is its resourcefulness in providing a one-stop-shop
agreed to reconsider the ruling on Feb. 16, following the and faster remediation for a range of consumer credit and
CFPB's appeal. banking issues."
Chorus of nays
The analyst additionally noted that the CFPB is more
The CFPB has received harsh criticism on Capitol Hill, than just a complaint bureau; it provides practical and
most recently from Sen. Ted Cruz, R-Texas, and Rep. John educational resources to consumers, as well as data,
Ratcliffe, R-Texas, who introduced two bills Feb. 14, 2017, research and compliance guidelines to business owners.
designed to eliminate the government agency. If the CFPB were eliminated, a number of government
agencies would continue to provide guidance on various
Sen. Cruz calls for eliminating the CFPB in S.370; Rep. consumer protection issues. These include the Office of the
Ratcliffe's bill, H.R. 1031, recommends eliminating Title Comptroller of the Currency, Office of Thrift Supervision,
X of the Dodd-Frank Act, which formed the basis for National Credit Union Administration, Federal Reserve
establishing the independent bureau. "The legislation that Board, Federal Deposit Insurance Corp., Internal Revenue
Rep. Ratcliffe and I are introducing today gives Congress Service, Federal Trade Commission and several more.
the opportunity to free consumers and small businesses
from the CFPB's regulatory blockades and financial As proposed legislation makes its way through Congress,
activism, which stunt economic growth," Cruz stated. and the D.C. Circuit Court prepares to revisit the CFPB's
"While there's much more to do to scale back the harmful constitutionality, consumer advocates point to the CFPB's
regulatory impositions of Dodd-Frank, this legislation accomplishments and remain cautiously optimistic about
takes a critical step in the right direction." the agency's future.

Rep. Ratcliffe added, "The CFPB's lack of accountability "Will the agency that in a few short years has saved
to the American people was quickly evidenced when – consumers $12 billion – and deterred a slew of rip-offs,
contrary to its name – it ended up hurting many of the very scams and schemes that banks and financial predators
folks it was intended to help. While Sen. Cruz and I have avoided for fear of the CFPB – be able to continue to do
been sounding the alarm on the CFPB's federal overreach its job?" said Robert Weissman, President of Public Citizen.

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