Thursday, September 08, 2011

House Leaders Link Passage of Legislation Changing Governance of the CFPB to Job Creation

In a letter to President Obama, Speaker John Boehner and House Majority Leader Eric Cantor asked the Administration to join in a bi-partisan legislative effort focusing on the amelioration of excessive, job-destroying regulations and the pursuit of pro-growth tax relief. In this regard, the leaders mentioned the Consumer Financial Protection and Soundness Improvement Act (H.R. 1315), which, they said, would increase consumer protection and government accountability by eliminating the ability of Dodd-Frank’s unelected Consumer Financial Protection Bureau Director to unilaterally carry out regulations that hurt job growth. The letter notes that HR 1315 has not yet been taken up by the Senate. They also noted that the Administration has publicly listed a total of 219 new regulatory actions under consideration for the upcoming year, each of which would have an estimated cost to the economy of $100 million or more.

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.