In a letter to Senate Banking Committee Chair Tim Johnson, the Republican members of the committee asked for hearings and mark-ups on three pieces of legislation pending in the House that would change the structure of the Bureau of Consumer Financial Protection created by Dodd-Frank. The legislation would replace the Bureau’s single Director with a board of directors to oversee the Bureau, subject the Bureau to the Congressional appropriations process, and establish a safety-and-soundness check for prudential regulators. ``We can protect consumers and ensure accountability at the same time. That is all we are proposing. We hope that President Obama and Senate Democrats will work with us to enact common sense checks and balances on this massive new bureaucracy,” Committee Ranking Member Richard Shelby (R-ALA) said.
Other independent federal financial regulators have governance structures with similar checks and balances, observed the letter, and the Bureau should be subject to the same type of accountability. The letter also noted that these reforms would not alter any substantive consumer protection law or regulation.
The Committee members also noted a recent letter they sent to President Obama stating that they would not support the consideration of any nominee to be the Director of the Bureau until the structure of the Bureau is reformed. As presently structured, they believe that far too much power is conferred on the Director without any effective checks and balances.
Three pieces of legislation reforming the Bureau have been marked up and approved by the House Financial Services Committee. H.R. 1121, the Responsible Consumer Financial Protection Regulations Act, introduced by House Financial Services Committee Chairman Spencer Bachus (R-AL) would replace the Director of the Bureau of Consumer Financial Protection with a five person Commission, similar to the SEC. HR 1315, the Consumer Financial Protection Safety and Soundness Improvement Act, would change the voting standard established in the Dodd-Frank Act for the Financial Stability Oversight Council (FSOC) from the two-thirds majority vote currently required to a simple majority vote and clarify that the FSOC must set aside any CFPB regulation that is inconsistent with the safe and sound operations of U.S. financial institutions. H.R. 1667, the Bureau of Consumer Financial Protection Transfer Clarification Act, introduced by Financial Institutions Subcommittee Chairman Shelley Moore Capito (R-WV), would delay the transfer of authority to the Bureau until a leadership structure has been put in place.