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Subcommittee Examines Legislative Proposals to Bring Accountability & Oversight to the Powerful Consumer Financial Protection Bureau

Washington, October 29, 2013 -

The Financial Services Subcommittee on Financial Institutions and Consumer Credit today examined several legislative proposals to bring accountability and oversight to the powerful Consumer Financial Protection Bureau (CFPB). 

The CFPB – by design –is unaccountable. Its unique and defective structure allows the CFPB to evade the time-tested and normal checks and balances that apply to virtually every independent regulatory agency, including those responsible for consumer and investor protection.

“We are here this afternoon to gain insight on proposals to reform the CFPB so that it is better suited to provide a stable regulatory environment for consumer credit,” said Subcommittee Chairman Shelley Moore Capito (R-WV). “Consumer protection is not a partisan issue, and the proposals before this subcommittee today do not attempt to weaken the CFPB in any way. Rather, these measures attempt to provide more accountability and transparency to an agency whose structure makes it susceptible to regulatory overreach and unbalanced rule writing.”

Legislation discussed at today’s hearing focused on one or more of three principal reform areas:

  • Reforming the leadership structure of the CFPB, including replacing the director with a bipartisan five-member commission; 
  • Reforming the funding mechanism of the CFPB and moving its employees to the General Schedule for compensation; and
  • Addressing concerns about the CFPB’s efforts to collect personal financial data on millions of Americans.

Witnesses representing community banks, credit unions and other employers testified at the hearing about the need for reform of the CFPB.

“Dodd-Frank gave the bureau expansive new quasi-legislative powers and discretion to re-write the rules of the consumer financial services industry based on its own initiative and conclusions about the needs of consumers,” said Robert S. Tissue of Moorefield, West Virginia-based Summit Financial Group. This “boundless grant of agency discretion is exacerbated by giving the head of the bureau sole authority to make decisions that could fundamentally alter the financial choices available to consumers.”

“No matter how qualified and competent a single individual is, a commission setup would allow for multiple consumer perspectives to be brought to the table in the CFPB decision making process,” said Lynette Smith of the Washington Gas Light Federal Credit Union in her testimony. “This would allow a healthy debate on new proposals before they are issued and not subject the agency to the agenda of a single director.”

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