WASHINGTON: Financial Services Committee Chairman Spencer Bachus made the following statement during consideration of three bills to promote robust consumer protection and improve the CFPB.
“Today the Subcommittee is marking up three bills that will improve the Consumer Financial Protection Bureau. One of the bills is legislation I’ve introduced, H.R. 1121, which does exactly what the House voted to do last year, and that’s to place the Consumer Financial Protection Bureau under the direction of a five-member, bipartisan commission.
“Some partisans of the CFPB have decried this as a radical concept. That’s unfounded and unfair. But what is actually radical is the current leadership structure of the CFPB. It is unlike any other found in the Federal bureaucracy. The CFPB director serves for a fixed term, and therefore is exempt from presidential control; exercises sole authority over the agency; and has the singular power to spend hundreds of millions of dollars outside the congressional appropriations process. Although some regulatory bodies have some of these features, no other entity in Federal government combines all of them.
“Almost all independent agencies -- including those responsible for consumer protection -- are governed by a commission rather than a single person. Whether it’s the FTC, SEC, CFTC, FCC, the Consumer Products Safety Commission, FDIC, EEOC, NCUA, the U.S. International Trade Commission, the Nuclear Regulatory Commission or the National Transportation Safety Board -- all are governed by a commission.
“Instead, the CFPB is set up to be controlled by a single individual who will have the power to ban products and services, with no real appeals process.
“A commission structure will help guarantee that CFPB rules are balanced, reasonable and fair. It will minimize the risk of having a captive regulator. It will also help ensure certainty and continuity when it comes to consumer protection. As it is currently structured, there will be uncertainty and discontinuity every time there is a change in directors. This is especially true when a vacancy in the directorship coincides with a change in presidential administrations. A bipartisan commission will help ensure that a change in directors every five years does not lead to abrupt changes in consumer protection.
“I hope this subcommittee will adopt this bill and the others we will discuss today. H.R. 1315, introduced by Mr. Duffy, is important to ensure the CFPB does not threaten the safety and soundness of any U.S. financial institutions, especially our small community banks. The standard for overturning a CFPB rule is very high. If the FSOC can only overturn a rule that “would put the safety and soundness of the United States banking system or the stability of the financial system of the United States at risk,” we could be left with rules that are inconsistent with the safe and sound operation of U.S. financial institutions.
“Small community banks perform important services in our communities, but would the FSOC really conclude that a CFPB rule that severely threatens the viability of small banks could put the entire banking system at risk? It is not clear that the FSOC could come to this conclusion under the current review standard.
“To ensure that all legitimate market players—not just the largest banks—do not have their safety and soundness impaired by the CFPB, the review standard by which the FSOC may set aside CFPB rules should be recalibrated, allowing that action to take place on less than system-wide impacts or risks.
“Chairman Capito, I urge my colleagues to support all three of the bills the Subcommittee will consider today. All of them will improve the CFPB.”
