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The CFPB’s Tough Month of April

CourtMuch of the controversy surrounding the nearly 5-year-old Consumer Financial Protection Bureau (CFPB) revolves around whether or not the Bureau was given too much power under the Dodd-Frank Act.

Many attempts have been made by lawmakers in the last couple of years to reform the CFPB, notably by Rep. Sean Duffy (R-Wisconsin) and Rep. Randy Neugebauer (R-Texas) to remove the Bureau’s director and replace him with a bipartisan commission; and a bipartisan bill introduced by Rep. Steve Stivers (R-Ohio) and Rep. Tim Walz (D-Minnesota) which would establish an independent inspector general for the CFPB.

None of these bills have gained any serious traction until last month, when the “Taking Account of Bureaucrats Spending Act” sponsored by Andy Barr (R-Kentucky) passed in the House Financial Services Committee by a vote of 33 to 20. The legislation proposes to make the CFPB accountable to Congress and to Taxpayers by placing the Bureau on a budget.

Adding to the CFPB’s tough month was the opening argument phase of the PHH Corp. trial challenging the CFPB’s constitutional authority. PHH claims the Bureau abused its power by increasing what was a $6 million penalty for allegedly taking mortgage insurance kickbacks up to $109 million. CFPB Director Richard Cordray faced some sharp questioning from a three-judge panel in the opening arguments in mid-April. PHH is the first company to challenge the CFPB’s authority in court.

According to the blog on the Hill, the Bureau also took a defeat in court recently when its demands for documents from a for-profit college accreditor were rejected because the judge ruled that the matter fell outside the CFPB’s statutory authority to govern consumer finance.

On the Hill’s blog, Brian Knight suggests that the courts may only marginally upset the status quo, and therefore Congress should take the lead if any CFPB reform is to take place. Knight said first, Congress should turn the Bureau into an independent bipartisan commission to provide for greater political balance, more diverse points of view, and a greater breadth of expertise in leadership; second, Congress should clarify the CFPB’s jurisdiction both in terms of scope and temporal reach—which includes defining clear statutes of limitations and enforcement actions; and third, Congress should take more control over the CFPB’s funding.

As for the third item that Knight suggested, that may be on its way with the recent passing of Barr’s bill in mid-April. Since any CFPB reform bill would face a certain presidential veto if it reaches the White House while Obama is president, however, the bills would have more luck with a Republican in the oval office.

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.
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