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On Thursday, March 9, 2023, at 10:00 a.m. (ET) Subcommittee on Financial Institutions and Monetary Policy Chair Congressman Barr and Subcommittee Ranking Member Congressman Foster will host a hearing entitled, “Consumer Financial Protection Bureau: Ripe for Reform."
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Witnesses for this one-panel hearing will be:
• Bill Himpler, CEO, American Financial Services Association
• Brian Johnson, Managing Director, Patomak Global Partners LLC
• Jessica Thompson, Attorney, Pacific Legal Foundation
• Devin Watkins, Attorney, Competitive Enterprise Institute
• The Honorable Keith Ellison, Attorney General, State of Minnesota
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Background
The hearing will examine the leadership structure, funding, budget, and operations of the CFPB and areas in which reforms are needed.
The Dodd-Frank Act established the CFPB as an independent agency. Unlike other federal financial agencies, the CFPB does not have an executive board, does not have an independent Inspector General, and does not allow for meaningful oversight of the director. The CFPB is led by a single director who is appointed by the president and confirmed by the Senate for a term of five years. The Dodd-Frank Act stated the President may only remove the director from office for cause, i.e. “inefficiency, neglect of duty, or malfeasance in office.” On June 29, 2020, the Supreme Court ruled in Seila Law LLC v. Consumer Financial Protection Bureau that the CFPB’s leadership structure is unconstitutional as a violation of the separation of powers. The CFPB operates outside of the annual Congressional appropriations process. Instead, it receives funding through direct transfers from the Federal Reserve (Fed), which is also not subject to the appropriations process. The Fed does not exercise authority over the CFPB or its budget. The CFPB director is required only to submit a letter to the Federal Reserve Board each quarter certifying the amount of funds that are “reasonably necessary” for carrying out the authorities of the Bureau. The Federal Reserve then transfers the requested amount. The CFPB’s funding mechanism differs than that of other financial markets regulators, including the Federal Trade Commission, the Commodity Futures Trading Commission, or the Securities and Exchange Commission, as well as the Federal banking agencies. This process affords very little oversight of the CFPB’s budget.
Legislative Proposals
The bills outlined below will be discussed during the hearing:
H.R. ____, the CFPB Dual Mandate and Economic Analysis Act
This bill would establish the Office of Economic Analysis in the CFPB to review all proposed and existing guidance, orders, rules, and regulations. The bill would require the CFPB to identify in each proposed rulemaking the problem to be solved by the rule or regulation and the metrics the CFPB will use to measure the success of the rule or regulation. These metrics must include a measurement of changes regarding consumer access to, and the cost of, consumer financial products and services. Additionally, the purpose of the CFPB would be revised to include strengthening private sector participation in markets, without government interference or subsidies, to increase competition and enhance consumer choice.
H.R. ____, the Taking Account of Bureaucrats' Spending (TABS) Act
This bill would eliminate provisions that fund the CFPB using transfers from the earnings of the Federal Reserve System. The transfers under current law permit the CFPB to be funded outside of the annual appropriations process. This bill brings the CFPB into the regular appropriations process allowing for greater oversight. Additionally, this bill would bring the CFPB out from under the Federal Reserve and make it into an independent agency named the Consumer Financial Empowerment Agency.
H.R. ____, the CFPB–IG Reform Act
This bill would establish a separate Office of Inspector General for the CFPB. Currently, such oversight of the CFPB is combined with the Office of Inspector General for the Board of Governors of the Federal Reserve System.
H.R. ____, the Transparency in CFPB Cost-Benefit Analysis Act
This bill would set forth information required to be included in a rulemaking made by the CFPB. Specifically, the CFPB must publish a justification of the proposed rulemaking; a quantitative and qualitative assessment of all anticipated direct and indirect costs and benefits; alternatives to the proposed rulemaking; impacts on small businesses; and any assumptions, data, or studies used in preparing this information...
Hearing page: [ Ссылка ]
