Is the CFPB too powerful?
Will Congress cut the agency’s budget?
by Carol Thompson
The Consumer Financial Protection Bureau (CFPB) has been making great strides in protecting the consumer from unscrupulous creditors, mortgage lenders, and non-bank service providers and recently issued a scathing report about mandatory arbitration.
The agency has been a bulldog when it comes to consumer activism, so much so, that it may be doing it’s job too well.
Congress is considering bill H.R. 1195, which creates additional burdens on the CFPB by imposing a de facto ceiling on the agency’s funding in order to offset the costs of the required advisory committees.
The legislation is said to be aimed at protecting small business concerns, however, the amended language of H.R. 1195 threatens the ability of the CFPB to conduct rulemakings by setting caps on CFPB spending. The bill seeks to establish three advisory committees for small businesses, credit unions, and community banks to “advise and consult” with the Bureau resulting in a $9 million cut in the agency’s budget.
The CFPB was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010 and it regulates the activities of large banks and credit unions as well as non-bank financial service providers, such as mortgage companies, payday lenders, auto financing companies, private student lenders, debt collectors, debt relief companies and credit reporting agencies.
In March, the agency released a scathing report on the subject of forced arbitration that was met with resistance from organizations such as the U.S. Chamber of Commerce, a powerful lobbyist.
The agency is not a favorite of House Republicans, who claim that the bureau generates too much red tape and unnecessary regulations that hurt businesses and discourage job creation. They’ve proposed restructuring it or even doing away with it altogether.
Despite the vote outcome, President Barack Obama would veto the Bureau of Consumer Financial Protection Advisory Boards Act if the final legislation by Congress cuts the level of funding that the director of the consumer bureau could request, according to a White House press release.
Along with its work monitoring of financial and non-financial institutions, consumer’s can file complaints and the agency then forwards the complaint on to the company for their response.
Consumers also have the option of having their complaint published, without identifying information, on the CFPB’s website.
Co-sponsors of the bill that came under veto threat Tuesday include Republican Reps. Ann Wagner and Blaine Luetkemeyer of Missouri, Patrick McHenry of North Carolina and Randy Neugebauer of Texas.