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Texas Lawmakers Introduce Bill to Eliminate CFPB

John Ratcliffe

John Ratcliffe

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Ted Cruz

Various legislation has been introduced by Republicans in an attempt to reduce the power of the Consumer Financial Protection Bureau (CFPB) in the last year, but there has not been any law proposed to completely eliminate the Bureau – until now.

During a week in which the Bureau celebrates the fourth anniversary of its creation, U.S. Representative John Ratcliffe and U.S. Senator Ted Cruz, both Republicans from Texas, have combined to sponsor a bill that would completely abolish the CFPB, according to announcements on both lawmakers' websites.

Republicans believe the CFPB, which was created from the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, has had the opposite effect of its intended purpose of protecting consumers from predatory financial activity; rather, they believe the Bureau has made big banks bigger and limits options for consumers.

"Don’t let the name fool you, the Consumer Financial Protection Bureau does little to protect consumers," said Cruz, who is a GOP candidate for the presidency in 2016. "The agency continues to grow in power and magnitude without any accountability to Congress and the people. The only way to stop this runaway agency is by eliminating it altogether. The legislation that Representative Ratcliffe and I are introducing today gives Congress the opportunity to free consumers and small businesses from the CFPB’s regulatory blockades and financial activism, which stunt economic growth. While there’s much more to do to scale back the harmful regulatory impositions of Dodd-Frank, this legislation takes a critical step in the right direction. So today let’s celebrate the CFPB’s fourth and final anniversary."

Republicans believe that Bureau is unaccountable to the American people because unlike most federal agencies, the CFPB is not subject to Congressional appropriations despite being funded by the Federal Reserve. Cruz and Ratcliffe believe this situation "invites regulatory excess and abuse."

Ratcliffe said he hears from small businesses in the fourth district of Texas, which includes the northeastern most part of the state, who say they can no longer provide their customers with basic financial services because of the increased compliance costs and paperwork hours imposed by the CFPB. He said many businesses are faced with the choice of closing their doors or consolidating into larger businesses due to the increasing cost of compliance.

“The CFPB’s regulatory zeal has stripped American consumers and businesses of their freedom of choice and has limited their access to capital - all in the name of a 'we know best' attitude from Washington," Ratcliffe said. ". . .I’m grateful to be able to introduce this bill with 46 of my House colleagues in conjunction with Senator Cruz. The CFPB represents exactly what President Reagan warned of – a government smothering opportunity rather than fostering it. We must eliminate the CFPB."

The GOP has made an extra push for CFPB reform since gaining a majority in the House and Senate last November. In March, Representative Sean Duffy (R-Wisconsin) introduced a series of proposals to reform the CFPB, including one co-sponsored by Randy Neugebauer (R-Texas) that would replace the CFPB's director with a bipartisan, Senate-approved five-member committee.

In February, Representatives Steve Stivers (R-Ohio) and Tim Walz (D-Minnesota) revived a bipartisan bill that would create an independent Inspector General for the CFPB that is appointed by the president and approved by the Senate. The Bureau currently shares an IG with the Federal Reserve, a position that is appointed by the Fed chair and not subject to Senate approval.

Democrats have vowed to fight any attempt at cutting back on the CFPB's power. Last week during a Senate Banking Committee hearing, Congressman Sherrod Brown (D-Ohio), Ranking Member of that Committee, pointed out the work the CFPB has done in the mortgage space.

"Much of the CFPB’s most important work has centered on mortgage regulation," Brown said. "The agency’s ability to repay rules ensure that consumers are not trapped in mortgages that they cannot afford. The CFPB’s rule to streamline forms will help consumers understand what is happening at the closing table. All of these actions speak for themselves as to why this agency is so important to our nation’s consumers.

"Yet, opponents continue to work to undermine the agency – by weakening its independence or changing its structure. Lately, there have been attempts to chip away at actions the agency has taken on arbitration and small-dollar loans. They have argued the agency should not be able to collect data – data about markets that were formerly non-transparent and unregulated. I will continue to fight all of these attempts to destabilize the CFPB. Our consumers deserve a strong watchdog that can do its job independently, and it’s my job to make sure that happens."

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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