CFPB Acting Director Calls for Agency Restructuring

In testimony before the Senate Banking Committee, Consumer Financial Protection Bureau (“CFPB”) Acting Director Mick Mulvaney outlined his recommendations for curbing the power and authority of the CFPB. Mr. Mulvaney addressed recent recommendations from the CFPB Semi-Annual Report.

Mr. Mulvaney echoed his request for Congress to (i) require the CFPB to obtain funding through Congressional appropriations, (ii) require legislative approval for major rules, (iii) install an independent Inspector General to oversee operations, and (iv) ensure that the CFPB is accountable to the president. Committee Chair Mike Crapo (R-ID) said that the “fundamental structure” of the CFPB should be altered in order to foster greater transparency and accountability. He called for a “bipartisan commission,” as opposed to the current single-director structure, and expressed support for Mr. Mulvaney’s request for funding dictated by Congressional appropriations rather than drawn from the Federal Reserve.

Committee Ranking Member Sherrod Brown (D-OH) charged that Mr. Mulvaney was appointed illegally, and accused him of waging a “war on working families” while “handing out favors to Wall Street and shady lenders.” Mr. Brown asserted that Mr. Mulvaney has given outsized salaries to his appointees at the CFPB, and condemned his decision not to pursue enforcement actions against payday lenders. Senator Elizabeth Warren (D-MA) denounced Mr. Mulvaney’s plans to “kill” the CFPB, and argued that he is “hurting real people [in order] to score cheap political points.”

In a previous letter to Senator Warren, Mr. Mulvaney said that his recommendations are intended to better align CFPB function with Congressional intent. Mr. Mulvaney said that the CFPB is uniquely insulated from congressional and executive oversight, and argued that changing the structure of the agency is necessary in order to make it “permanently accountable and transparent.”

Lofchie Comment: Mr. Mulvaney argues that the CFPB should be made into an ordinary regulatory agency, accountable to Congress and with leadership composed of members of both political parties. Senator Warren’s argument that Mr. Mulvaney is “killing” the CFPB by suggesting that Congress should have authority over it is very strange, particularly given the conventional wisdom that Democrats will attain a majority in at least one house of Congress in the next election.

Rather than denounce Mr. Mulvaney, Senator Warren and Senator Brown might consider adopting his suggestions, which would give the Democrats institutional representation at the CFPB and continuing non-partisan insight as to its activities. In this way, the Senators would improve the long-term operation of the CFPB by allowing for genuine Congressional control over its budget, activities and leadership; and by assuring that there would be CFPB Commissioners representative of both parties.