WASHINGTON, Dec 7 (Reuters) - Bank lobbying groups are pressing the U.S. Senate to once again work on reforming the country’s consumer financial watchdog agency - but this time around they may see those changes become reality.
In a letter to Senate leaders released on Wednesday the groups, including the Consumer Bankers Association and the Credit Union National Association, called for legislation to change the leadership of the Consumer Financial Protection Bureau from a single director to a five-member commission.
They also asked Congress to void the CFPB’s recent rule on prepaid cards and halt work on regulations for mandatory arbitration, payday lending, and third-party debt collection using a law known as the Congressional Review Act.
The CFPB’s sole director has “unprecedented authority over financial institutions, with minimal oversight,” they wrote in the letter, which was also signed by the Independent Community Bankers of America and the National Association of Federal Credit Unions.
“As the sole decisionmaker, the director can promulgate regulations and levy enforcement actions that have sweeping and longlasting effects on credit availability for consumers,” the groups wrote.
Many have supported commission leadership since the CFPB was first created in the 2010 Dodd-Frank Wall Street reform law to protect everyday consumers from bad actors in the areas of mortgages, student loans, credit cards and banks. Recently, the CFPB and other agencies fined Wells Fargo & Co $185 million for creating fake accounts.
Republicans drafted the first Senate bill to change the CFPB, currently headed by Richard Cordray, in 2012 and then introduced similar legislation in the following three years. In the House of Representatives, the Financial Services Committee recently approved a sweeping bill that would also create a commission to run the agency.
Democratic President Barack Obama, who championed Dodd-Frank, has always stood in the way of establishing a commission with his veto pen. President-elect Donald Trump, a Republican, is expected to support any CFPB changes.
The single-director structure allows the CFPB to move quickly and eliminates the risk of protracted fights among commission members, proponents say.
A three-judge panel in the U.S. Court of Appeals for the District of Columbia recently agreed the director has too much power, although it ruled that could be remedied by allowing the president to fire the director without cause. The government has petitioned for a review of the decision by the entire court, which has signaled it will approve taking up the review before Trump’s Jan. 20 inauguration. (Reporting by Lisa Lambert; Editing by Jonathan Oatis)