Financial Services Committee Chairman Spencer Bachus, who has introduced legislation approved by the House to place the Consumer Financial Protection Bureau (CFPB) under the leadership of a five-member, bipartisan commission, released the following statement about a lawsuit filed in federal court today challenging the constitutionality of the Dodd-Frank Act:
"There is no question the Consumer Financial Protection Bureau -- by the design of Dodd-Frank Act supporters -- lacks accountability and transparency. As it is currently structured, the CFPB is one of the most powerful and least accountable agencies in all of Washington. Everyone supports consumer protection, but everyone should also support real oversight and accountability of massive government bureaucracies, and that includes the CFPB. House Republicans have worked to change the bureau's structure to make the CFPB more effective, less politicized and more accountable. We've approved common sense reforms that in no way diminish the CFPB's consumer protection mission but do guarantee taxpayers there will be checks and balances on a government bureaucracy that spends hundreds of millions of dollars," said Chairman Bachus.
"A bipartisan commission would help ensure that CFPB rules are balanced, fair and reasonable. It also promotes continuity in rulemaking by preventing a new director from unilaterally reversing the decisions made by a previous director. This is a structure that has worked well for nearly every other regulatory body in this country and will work for the CFPB," Chairman Bachus said.
The Dodd-Frank Act established the CFPB as an independent bureau within the Federal Reserve. Under Dodd-Frank, the CFPB is run by a single director who has sole authority over the agency's 1,000-plus government employees and can spend its budget without any oversight. The CFPB director also has the authority to decide which financial products and services will be available to American consumers.
The CFPB director's mandates can be overturned, but only in extremely limited and highly unlikely circumstances by a small council of fellow Presidential appointees -- one of whom is the CFPB director.
This makes the CFPB unlike any other governmental agency, including those whose responsibilities include protecting consumers.
The House passed legislation in July 2011 on a vote of 241-173 to improve the structure of the CFPB. H.R. 1315, introduced by Rep. Sean Duffy, Chairman Bachus and Rep. Shelley Moore Capito:
Establishes a five-member, bipartisan commission to manage the CFPB. House Democrats had voted to place the CFPB under the direction of a five-member, bipartisan commission during debate over the Dodd-Frank Act but later abandoned their support for the commission structure.
Creates a meaningful review process for rules promulgated by the CFPB that takes into consideration how a proposed rule could endanger the safety and soundness of consumers' financial institutions; and
Ensures there is a Senate-confirmed chair of the commission before the CFPB exercises its new regulatory authority.