Republicans move in to rip Dodd-Frank Act on financial regulation
10 February 2017
After its move to end net neutrality, the Trump administration now has Consumer Financial Protection Bureau (CFPB) in its cross hairs.
The chairman of the House Financial Services Committee Jeb Hensarling, a Republican from Texas, plans to overhaul the CFPB, stripping it of its power to crack down on predatory business practices and place it under President Trump's authority, reveals a leaked memo that emerged yesterday.
Hensarling plans to rework the Dodd-Frank financial reform law to significantly reduce the powers of the CFPB and have it reporting to the President.
The Dodd-Frank Act was enacted in the aftermath of the 2008 financial crisis to exercise oversight on Wall Street.
Democratic defenders of the bureau have expressed outrage at the move.
The memo outlined plans to systematically weaken the leadership of the agency, allowing the president to replace the bureau's director at any time. Upcoming legislation aimed to limit the bureau's enforcement authority, cut its ability to make rules and scrap its consumer complaint system.
The consumer watchdog would lose many of the enforcement tools at its disposal.
Effectively, this would tie the regulators' hands and render it powerless against businesses engaged in deceptive practices.
''This would substantially change the structure of the C.F.P.B. and greatly limits the scope of its authority,'' said Hunter Wiggins, former principal deputy enforcement director at the bureau, The New York Times reported.
Under Hensarling's plan, the agency would no longer be able to regulate entities already regulated by the Securities and Exchange Commission or the Commodity Futures Trading Commission or levy fines against institutions.
Other changes to the CFPB would lead to the elimination of its consumer education role, as well as its ability to supervise financial institutions and conduct market research.
The agency would only be able to write rules authorized by Congress, and its database where consumers can lodge complaints about financial institutions would be eliminated and its enforcement powers would be limited to cease and desist letters and subpoenas.
''CFPB is to be retained and re-structured as a civil law enforcement agency similar to the Federal Trade Commission, with additional restrictions on its authority,'' the memo says.
In a column in the The Wall Street Journal, Hensarling called the agency ''arguably the most powerful, least accountable agency in U.S. history'' and proposed finding a way to strip funding from it. ''The agency defines its own powers and can launch investigations without cause, imposing virtually any fine or remedy, devoid of due process,'' said Hensarling.