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More Calls for a Commission, Not a Director, at the CFPB


Washington, Oct 21 -

The Consumer Financial Protection Bureau would be strengthened – not weakened – if its leadership structure were changed to a bipartisan commission, argues Roland E. Brandel in the American Banker.

Calling the vesting of the bureau’s enormous power in a single person a “serious flaw,” the highly acclaimed consumer financial services lawyer writes:

“A single director, no matter how intelligent, how well educated, how experienced, how well-meaning, and how well supported by staff, research and studies, faces limitations every human faces with respect to each of such qualifications.  If the ultimate policy powers of the bureau are vested in a commission, one that consists of persons also highly qualified, important policy decisions will be informed by the multiple bases of differing experience, education and values of those commissioners.  A give and take of those commissioners should result in decisions superior to those that would be made by a single director.”

Making sure proposed rules first benefit from differing points of view is especially important given that “[l]ittle the bureau will do as it fulfills its consumer protection mandate will be free of costs to consumers,” Brandel points out.

Republicans on the Financial Services Committee have worked to change the CFPB’s leadership structure so there will be accountability and transparency at this massive and powerful government bureaucracy.  Legislation to place the CFPB under the management of a bipartisan commission was introduced by Chairman Spencer Bachus earlier this year and then incorporated into legislation sponsored by Rep. Sean Duffy that passed the House of Representatives 241-173.

But Republicans can’t – and don’t – take credit for the idea.  Democrats in the House actually sponsored and voted to approve legislation that put the CFPB under the direction of a bipartisan commission back in 2009.  Now, they claim a bipartisan commission would be a “knife in the ribs” to the CFPB.

Virtually all independent agencies are led by bipartisan panels rather than a single director.  This includes the Consumer Product Safety Commission, which was the model Professor Elizabeth Warren used for the creation of the CFPB.   These agencies were established with bipartisan commissions to ensure their rules are fair, consistent and balanced, and to promote certainty and continuity.  With a single director model, decisions and policies set by the director can be quickly and unilaterally reversed by a new director whenever there is a change in the CFPB’s leadership.

A bipartisan commission makes the CFPB more accountable, replicates the structure of other federal agencies charged with consumer or investor protection, and promotes continuity and predictability in rulemaking.  The Senate should join the House in this act of common sense.