Lawmakers Introduce Legislation That Would Abolish The CFPB

The future of the Consumer Financial Protection Bureau continues to remain in question with yet another attack being lobbed at the Bureau this week as lawmakers introduced new legislation both in the House and Senate that would abolish the agency.

The legislation — dubbed Repeal CFPB Act — was introduced by Texas lawmakers Sen. Ted Cruz and Rep. John Ratcliffe. The Act would eliminate Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act, essentially dismantling the CFPB.

Title X of Dodd-Frank — a provision known as the Consumer Financial Protection Act of 2010 — established the CFPB as an independent agency tasked with reining in deceptive and anti-consumer practices in a variety of financial products and services.

The recently introduced pair of bills — S. 370 [PDF] and H.R. 1031 [PDF] — would completely undo the provision, making it as if the CFPB never existed.

Sen. Cruz and Rep. Ratcliffe claim in a joint statement about the bills that they would “free consumers and small businesses from the CFPB’s regulatory blockades and financial activism.”

The CFPB and Dodd-Frank Act have been a target of lawmakers and the Trump Administration in recent weeks.

In early February, Trump signed a mostly symbolic executive order directing federal regulators to revise the rules established by the 2010 financial reforms.

Last week, Texas Rep. Jeb Hensarling, chairman of the House Financial Services Committee, announced plans to revise the Financial Choice Act bill he introduced last year to include provisions that would eliminate Wall Street financial stress tests and turn the head of the CFPB into an appointed position.

In a Feb. 8 memo, Hensarling reportedly said his revised bill would overhaul the annual stress tests the Federal Reserve uses to determine if banks have enough capital to sustain a financial crisis.

With respect to the CFPB, the revised Financial Choice Act would largely transform the Bureau into a law enforcement agency, as it would only be able to pass rules that have been mandated by Congress.

The CFPB has also been the center of a legal battle related to whether or not its leadership structure is unconstitutional.

The CFPB, has a rare — but not unique — leadership structure. Its sole Director is appointed by the President, but can only be removed from office if the administration demonstrates that the Director has done something deserving of dismissal. Most agencies with just one director-level administrator work at the discretion of the Oval Office, meaning the President can fire that person at whim.

The Bureau is currently appealing a court ruling that would allow the President to fire a CFPB Director without having to show cause.