A Republican-led U.S. House of Representatives Financial Services subcommittee approved legislation yesterday in an attempt to limit the powers of the new Consumer Financial Protection Bureau (“CFPB”), which is scheduled to open for business on July 21. The legislation, which likely would never become law since it would need to be approved by the Democratic-run Senate and President Obama, would have the CFPB director position replaced by a five-member bipartisan commission and make it easier for the new Financial Stability Oversight Council to overturn CFPB-led regulations. The subcommittee also approved a proposal to prevent the CFPB from exercising certain authorities until a director is in place – a confirmation process that is shaping up to be lengthy and contentious. The Obama administration currently is considering director candidates with Elizabeth Warren, the architect of the CFPB, at the top of the list. Republicans have come out strongly in opposition to Ms. Warren’s nomination.
Some consumer advocates see the goal of these bills as an attempt to send a message to the CFPB to be less aggressive as it moves forward. Others view the legislation as an attempt to ensure that proper checks-and-balances are in place at the new Bureau. The full House committee plans to meet on May 12 to consider these bills.
We should expect lots of vigorous debate along political lines in the months leading up to the July grand opening of the CFPB.