CFPB Director or CFPB Commissioners? House Republicans Prefer the Latter
Coinciding with Elizabeth Warren’s inaugural testimony before Congress in her capacity as Special Advisor to the Secretary of the Treasury for the Consumer Financial Protection Bureau (CFPB) on Wednesday, House Financial Services Committee Chairman Spencer Bachus (R-AL) revived a dormant proposal that would decentralize the leadership of what Bachus calls the “most powerful agency that’s ever been created in Washington.”
Joined by 26 GOP colleagues, Bachus introduced H.R.1121, the Responsible Consumer Financial Protection Regulations Act, legislation that would replace the position of CFPB Director with a five-member Commission consisting of members that are nominated by the President and confirmed by the Senate. In addition, H.R. 1121 requires the commission to be comprised of no more than three members of the same political party—a bipartisan structure similar to that of the FTC, FDIC and SEC. According to Bachus, Dodd-Frank consolidates too much authority in the hands of a single CFPB director.
The commission structure—an idea first proposed in Congress by former Rep. Walt Minnick (D-ID) during the initial stages of the Dodd-Frank debate in 2009—has long been under discussion on Capitol Hill and was ultimately included within the financial reform legislation that first passed the House in December of 2009. (The commission language was ultimately scrapped during the House-Senate conference negotiations.)
Although no Democrats have signed onto H.R. 1121 thus far, House Republicans view the commission proposal as perhaps the most palatable CFPB reform option for Congressional Democrats, who have remained unified in resisting recent GOP efforts to slash the agency’s budget.
When pressed by Rep. Sean Duffy (R-WI) during a House Financial Services Subcommittee hearing yesterday, Ms. Warren testified that Congress made the “right decision” in choosing a consolidated directorship in favor of a five-member board. Warren cited the OCC and OTS as examples of single director agencies that Congress centralized in order to create “a more efficient operation.”
Responding to Republican arguments during the hearing that the CFPB possesses unchecked and unprecedented financial regulatory authority, Warren reminded lawmakers that CFPB rules can be nullified by the newly-created Financial Stability Oversight Council (FSOC) if the council determines that such rules may affect the safety and soundness of a particular financial institution. “That is not true for any other agency,” said Warren.
In addition to H.R. 1121, a handful of GOP freshmen in the House have also introduced legislation to amend or repeal certain sections of Dodd-Frank as part of a broader GOP effort to tie the financial regulatory environment to U.S. job creation and economic competitiveness. The bills include the following:
- Chief Executive Officer (CEO) Compensation Disclosures—Rep. Nan Hayworth (R-NY) introduced H.R.1062, the Burdensome Data Collection Relief Act, which would repeal Section 953(b) of the Dodd-Frank Act that requires all public companies to disclose the ratio of the median annual “total compensation” of all company employees to the annual “total compensation” of the CEO within all of the company’s SEC filings.
- SEC Registration—Rep. Robert Hurt (R-VA) introduced H.R.1082, the Small Business Capital Access and Job Preservation Act, which would exempt advisors to Private Equity Funds from new SEC registration and reporting requirements under Dodd-Frank.
- Public Offerings—Rep. David Schweikert (R-AZ) introduced H.R. 1070, the Small Company Capital Formation Act of 2011, which will increase the SEC’s Regulation A exemption for the public offerings of small companies from $5 million to $50 million. In addition, the bill requires the SEC to revisit the exemption ceiling every two years.
These bills were reviewed on Wednesday during a House Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises—chaired by Rep. Scott Garrett (R-NJ)—that focused on “job creation, capital formation and market certainty.” The subcommittee also reviewed two yet-to-be introduced bills by freshman Reps. Michael Grimm (R-NY) and Steve Stivers (R-OH). Grimm’s proposal would amend the definitions of ‘‘major swap participant’’ and ‘‘major security based swap participant,’’ while the Stivers bill would repeal section 939G of Dodd Frank that related to the legal liabilities of credit rating agencies.
