House hearing highlights partisan division over CFPB mission

The U.S. House of Representatives Subcommittee on Financial Institutions and Monetary Policy held a hearing last week on whether the Consumer Financial Protection Bureau (CFPB) should be reformed in regard to its mission.

Subcommittee Chairman Rep. Andy Barr (R-KY) used the opening remarks to note that the agency is lacking oversight that’s consistent with other federal agencies while taking aim at CFPB Director Rohit Chopra for the enforcement actions pursued since Chopra entered office.

“[Director Chopra] has routinely acted unilaterally and arbitrarily, often outside any statutory mandate, without engaging rulemaking in compliance with the Administrative Procedures Act (APA) and even sometimes without adjudication,” Barr said. “This has led to the CFPB becoming the most unchecked, unaccountable agency in the whole Federal government.”

Ranking member Rep. Bill Foster (D-Ill.) used his opening statement to take aim at continual efforts by Republicans to limit the agency’s authority, describing the work of the Bureau as being supported by American taxpayers.

“[R]oughly 80% of polled U.S. citizens support the CFPB and want the agency to continue its job,” Foster said. “My friends across the aisle would be wise to listen to their constituents and work in a bipartisan way to truly improve the CFPB, and not to handicap or abolish it. As American families are emerging from the struggles of the pandemic, now is not the time to weaken consumer protection.”

Five witnesses testified during the hearing, including American Financial Services Association CEO Bill Himpler, Patomak Global Partners Managing Director Brian Johnson and Minnesota Attorney General Keith Ellison. Attorneys from the right-leaning Pacific Legal Foundation and the Competitive Enterprise Institute also provided testimony.

Four of the five witnesses contended that the Bureau operated outside the jurisdictional authority outlined in the Dodd–Frank Wall Street Reform and Consumer Protection Act, the law that established the CFPB. Johnson cited 30 instances in which he contended that the CFPB acted outside of its authority, while Pacific Legal Foundation Attorney Jessica Thompson said that numerous actions taken by the Bureau undermine its mission of consumer protection.

“Free from the oversight and accountability that accompanies the Congressional appropriations process, CFPB can evade the APA rulemaking process by using consent orders as precedential guidance to regulated institutions,” she said. “CFPB’s use of consent orders in this manner present constitutional concerns for due process, undermine[s] the rule of law, and will limit consumer access to financial service.”

Attorney General Ellison came to the Bureau’s defense, using his time to describe the CFPB as a critical partner in his state’s efforts to protect consumers.

“States like Minnesota have historically served at the forefront of efforts to protect consumers against fraudulent and abusive practices, and for over a decade the CFPB has served as a critical enforcement partner to us in our efforts,” Ellison said. “This is what Congress intended when it created the CFPB in response to the 2008 financial crisis, and this is how it should remain.”

The hearing also discussed a series of nine proposed laws that would help to serve the stated goal of “reforming” the Bureau, all proposed by Republican House members. These include a proposal to establish an “Office of Economic Analysis” within the CFPB; a proposal to eliminate provisions that fund the CFPB using transfers from the Federal Reserve; a proposal to establish a separate Office of Inspector General for the CFPB; and minimum information to be included in any proposed rule-making by the CFPB.

The proposed laws are unlikely to progress beyond the House due to Democratic control of the Senate and the White House. House Financial Services Committee Ranking Member Rep. Maxine Waters (D-Calif.) released a joint statement with Sen. Sherrod Brown (D-Ohio), Chair of the Senate Banking Committee, on the same day the hearing took place.

“This is not reform for the benefit of consumers; it is another page pulled from the same Republican playbook designed to destroy the CFPB and its work to empower consumers,” the lawmakers said. “The CFPB has made major progress in supporting consumers, combatting discrimination and junk fees, holding large financial institutions accountable for repeatedly harming consumers, and so much more.”