CFPB Changes Omitted From Final Spending Bill
Congressional Republicans have dropped plans to enact changes to the CFPB through the appropriations process.
Congressional negotiators this week released their version of a Continuing Resolution that, in most cases, would fund federal programs until April 28.
The bill is considered to be must-pass legislation since, without its enactment, funding for most federal programs would expire on Dec. 9.
That legislation includes programs normally found in the annual Financial Services spending measure.
House Republicans had proposed reining in the CFPB in their version of that bill. The Senate version of the bill did not contain those changes, and the final agreement also does not include them.
The spending bill does include some non-spending matters—most notably a waiver that would allow retired Marine Corps General James Mattis to be nominated as Defense Secretary.
“The legislation also includes a limited number of ‘anomalies,’ which are programmatic or funding changes related to unique situations arising during the duration of the continuing resolution,” Senate Republican appropriators said, in unveiling the bill.
However, the CFPB changes were not among the anomalies.
That likely means that the agency will be able to move on initiatives unabated.
For instance, in the latest version of its regulatory agenda, the agency said final rules regulating mandatory arbitration agreements in financial and employment contracts could be released in February.
The House bill prohibited those rules from being released until the agency conducted a more detailed study of the issue. That provision is not included in the final spending measure.
The agency has said such clauses in contracts prevent consumers – including credit union members – from joining together in a suit to accuse financial institutions of wrongdoing.
Critics of the CFPB have alleged that a study the agency was required to conduct before issuing the rules was poorly conducted and did not meet the statutory requirements of the Dodd-Frank Act.
In addition to delaying the rules, the House appropriations measure would have converted the agency into one that was governed by a board rather than the director of the agency.
And the House bill would have delayed the issuing of controversial payday lending rules. The agency issued preliminary rules governing such loans earlier this year.
That provision is not included in the bill; nor is a plan to make the CFPB subject to the annual appropriations process.
Those proposals—and more—are contained in a Dodd-Frank overhaul bill sponsored by House Financial Services Chairman Jeb Hensarling (R-Texas). That legislation will not be enacted this year, but Hensarling recently was selected for another term at the helm of the Financial Services panel. House Republicans have said they will push that legislation again next year.
In a related development, four banking and credit union trade groups have sent a letter to congressional leaders asking Congress to enact legislation converting the CFPB into a five-member commission next year.
“The CFPB is an independent regulatory agency that provides the sole director unprecedented authority over financial institutions, with minimal oversight,” leaders of CUNA, NAFCU, the Consumer Bankers Association and the Independent Community Bankers of America said in the letter.
They added, “In contrast, a Senate confirmed, bipartisan board or commission will provide a balanced and deliberative approach to supervision, regulation, and enforcement over financial institutions that is more in keeping with other financial regulators.”
A federal appeals court recently ruled that the structure of the CFPB is unconstitutional and that the president should be permitted to remove the CFPB director at will. Currently, the CFPB director may only be removed for cause.
The ruling has been delayed and the CFPB has appealed it.