On the one-year anniversary of the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the House of Representatives passed legislation restructuring the Consumer Financial Protection Bureau created by the Act. The Consumer Financial Protection Safety and Soundness Improvement Act, HR 1315, would establish a bi-partisan, five-member Commission consisting of a Chair and four additional members to carry out all of the duties that would otherwise fall to the Director of the CFPB. Commission members would be appointed by the President, confirmed by the Senate, and would serve five-year terms.
The legislation would also amend Section 1023 of the Dodd-Frank Act, which addresses the Financial Stability Oversight Council’s review and oversight of Consumer Financial Protection Bureau regulations that may undermine the safety and soundness of U.S. financial institutions. The legislation would make four changes to the FSOC’s review procedures: (1) it would lower the threshold required to set aside CFPB’s proposed regulations from a two-thirds vote of the FSOC’s voting membership to a simple majority, excluding the Director of the CFPB; (2) it would clarify that the FSOC must set aside any CFPB regulation that is inconsistent with the safe and sound operations of U.S. financial institutions; (3) it would eliminate the 45-day time limit for the FSOC to review and vote on CFPB regulations; and (4) it would require that all FSOC meetings be open to the public whenever it decides to stay or set aside a CFPB regulation.
HR 1315 would also amend Section 1062 of the Dodd-Frank Act to delay any further transfer of powers to the CFPB until the later of the following: (1) July 21, 2011; or (2) the date on which the Chair of the Commission of the Bureau is confirmed by the Senate.
In floor remarks, Rep. Shelley Moore Capito (R-WV), Chair of the Financial Institutions Subcommittee, said that having a five-member Commission rather than a single Director will strengthen the leadership of the CFPB in two ways. First, a Commission where the individual commissioners are staggered in their terms will provide greater stability by ensuring there is always some form of leadership in the CFPB. Second. a Commission will provide greater consistency, not only in rulemaking, but also from one Administration to another. Rep. Capito feared that a single Director will set up a situation in which the leadership of the CFPB will be subject to the ideology of the current Administration when the director is appointed.