CFPB Reform Bill Introduced in House Designed to Pass Congress

Like similar efforts over the past several years, a Republican lawmaker has introduced legislation that would change the structure of the Consumer Financial Protection Bureau (CFPB), and even its name. But unlike previous attempts, this particular bill is narrow enough in focus that it has a good chance of passing Congress, especially given the recent change in power in the Senate.

H.R. 1266, introduced Wednesday by Rep. Randy Neugebauer (R-Texas), would primarily create a commission structure to lead the CFPB. Currently, the Bureau is headed by a lone Director, Richard Cordray. Republicans and financial industry interests have long wanted the CFPB’s leadership to be restructured into a commission, like that at the Federal Trade Commission.

And that’s just what Neugebauer’s bill does. It lays out the framework for creating a bipartisan commission leadership structure in great detail, including a provision that no more than three commissioners can be members of one political party. The proposal calls for the staggering of commissioner terms so that there are not overlapping vacancies when terms end.

The language of Neugebauer’s bill does a few other things, like readjust CFPB executives’ pay to the federal scale and create an official seal for the agency. It also proposes to rename the CFPB to the Financial Products Safety Commission. But it stops short of previous wholesale reform efforts taken up by Republicans recently.

Last year, the U.S. House passed H.R. 3193, a bill with very similar language to H.R. 1266 in many places. H.R. 3193, however, included extensive provisions for bringing the CFPB under Congressional appropriations; the bill introduced Wednesday does not include such language.

Neugebauer’s bill already has plenty of support. The legislation was introduced with 20 initial co-sponsors, all Republicans and all members of the House Financial Services Committee, on which Neugebauer serves. The bill has already been referred to that committee.

A coalition of banking and business groups also voiced their support in a letter sent yesterday to Neugebauer. The groups — including the American Bankers Association, the Consumer Bankers Association, and the U.S. Chamber of Commerce — said, “We believe that a five-member commission, as Congress originally intended, will better balance consumer access to financial products with the need to ensure a fair marketplace.”

The letter noted that the original plan for the CFPB was a five-member commission. “In 2009, then-House Speaker Nancy Pelosi (D-CA), then-House Financial Services Committee Chairman Barney Frank (D-MA), and Ranking Member Maxine Waters (D-CA) led passage of legislation in the House with strong Democrat support to create a five-member commission to oversee the CFPB which is nearly identical to what your legislation proposes to do,” the coalition said in the letter.

Stripping out specific appropriations language may be an overture to reluctant Congressional Democrats for their support. When H.R. 3193 passed last year, it did get 10 Democrat votes in the House. It was never considered in the Senate, then controlled by Democrats.

Now that Republicans control the Senate, a bill passed by the House is sure to come up, and it is likely to pass even without Democratic support. And just as likely is a veto from President Obama. But any additional votes from the minority party would boost the bill’s prospects as a bargaining chip or political talking point.

The bill also has strong opposition. A coalition of 300+ consumer interest groups sent its own letter defending the CFPB, the work it has done so far, and the independent nature of the Bureau under its current leadership structure. Under the banner of Americans for Financial Reform, the groups noted, “The CPFB’s leadership structure is critical to its accountability to the public and consumers,” and that “The CFPB’s independent funding insulates it from partisan attacks.”

Any CFPB reform legislation will also find an ardent opponent in the Senate in the form of Sen. Elizabeth Warren (D-Mass.). Warren was originally tapped to head the Bureau and has signaled strong opposition to any legislation that weakens the CFPB.