The CFPB must conduct detailed cost-benefit analyses of all rules and comply with other executive orders as a result of last week's appellate court decision that they agency was unconstitutional. This warning came from House Financial Services Chairman Jeb Hensarling on Wednesday.
Hensarling—an outspoken opponent of the CFPB—said the agency must comply with such orders when issuing any rules, including those governing arbitration agreements, payday, vehicle title and installment loans and debt collection.
A federal appeals court last week ruled the organization of the CFPB is unconstitutional since it is operated by a single person who is not answerable to anyone, but the court said that the agency may continue to operate.
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The bureau will operate as a federal agency whose director is supervised and may be removed by the president, according to the court ruling.
In his letter, Hensarling cited four specific executive orders he believes the agency must follow, including:
- An order issued by President Clinton in 1993 that requires all executive departments to conduct detailed cost-benefit analyses of all rules and possible alternatives to the rules.
- An order issued by President Obama in 2011 that requires all executive agencies to tailor regulations to impose the least burden on society. In addition, agencies must develop plans to review all significant rules periodically.
- An order issued by President Clinton that requires executive departments to document their consultation with state and local officials whenever a rule poses significant federalism implications.
- An order issued by President Clinton that requires agencies to consult with Indian tribal governments before issuing rules.
"These executive orders issued by presidents Clinton and Obama are modest attempts to ensure that executive agencies are accountable to the American people and do not recklessly write regulations that damage our economy," Hensarling said.
The CFPB had no immediate reaction to Hensarling's demand.
A group supporting the CFPB called on the agency to reject Hensarling's demand.
"Even if the decision were upheld, current law specifically identifies the CFPB as an independent agency that is excluded from the executive order requiring OIRA review," said Amit Narang, regulatory policy advocate for Public Citizen's Congress Watch Division.
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