(Adds request for brief from solicitor general)
By Lisa Lambert
WASHINGTON Dec 7 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, which
they say would make the agency more accountable.
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
The director's power to both create regulations and carry
out enforcements, including levying million-dollar fines, can
"have sweeping and longlasting effects," 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 to also create a commission to
run the agency.
Democratic President Barack Obama has stood in the way of
establishing a commission with his veto pen. President-elect
Donald Trump, a Republican, is expected to support 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 petitioned the entire court for a review of
The court has signaled it will vote on the petition before
Trump's Jan. 20 inauguration, and many expect it will go ahead
with the review.
In an unusual step revealing the case's importance, it asked
the solicitor general to file a separate brief. Lawyers say the
separate brief may be a form of due diligence, showing the court
has heard all sides. Or, it could be a way to "lock in" the
current administration's opinion to create consistency with the
next one. The solicitor general under Trump would represent the
CFPB if the case goes to the Supreme Court.
(Reporting by Lisa Lambert; Editing by Jonathan Oatis)