April 5, 2011
the Consumer Financial Protection Bureau (CFPB)
House Finance Committee to Hold Hearing on Proposals
to Restructure the CFPB on Wednesday, April 6
WASHINGTON, D.C. – House members should oppose efforts to weaken the Consumer Financial Protection Bureau (CFPB) by changing its leadership structure, according to a letter sent by Consumers Union to members of the House Financial Services Committee. The Committee is scheduled to consider proposals to restructure the CFPB at a hearing on Wednesday, April 6.
“At a time when every dollar counts, consumers need a strong watchdog in Washington to help protect them from unfair financial practices and products,” said Pamela Banks, Senior Policy Counsel for Consumers Union, the nonprofit publisher of Consumer Reports. “Recent proposals to create a five-member commission to carry out the CFPB’s duties would weaken its ability to respond to financial rip-offs in the marketplace. As we all know, the failure to act quickly and effectively to protect consumers from unsafe financial products and services is what fueled the economic crisis from which our nation is still recovering.”
Beginning in July 2011, the Consumer Financial Protection Bureau will be charged with identifying and stopping unfair, deceptive, and abusive practices in the sale and delivery of financial services to consumers. The CFPB will have the responsibility to keep the rules governing financial service products up-to-date and to respond to consumer complaints.
A full copy of Consumers Union’s letter to the House Financial Service Committee follows:
April 4, 2011
The Honorable Spencer Bachus
Chair, House Financial Services Committee
2129 Rayburn House Office Building
Washington, DC 20515-6050
Dear Representative Bachus:
The recently introduced Responsible Consumer Financial Protection Regulation Act, H.R. 1121, aims to create a five- member commission to carry out the duties of the Consumer Financial Protection Bureau. Consumer Union, the non profit publishers of Consumer Reports®, respectfully disagrees with this proposed change to the CFPB’s structure and strongly supports a single director as the most efficient and effective way to run the CFPB.
A commission style structure would lack the strong leadership needed in a new institution, as well as organizational unity and purpose. The decision making process would be slower and more prone to internal discord, while requiring a high level of coordination resulting in costly, time consuming and duplicative administrative resources. As we know, the failure to act quickly and effectively to protect consumers from unsafe financial products and services is what fueled the economic crisis from which our nation is still recovering. Moreover, the added costs associated with a commission would be particularly unwise at a time of limited resources.
The Wall Street reform bill created a presidentially-appointed and Senate-confirmed director for the CFPB. With a single director, responsibility and accountability for the CFPB is clear and streamlined. There would be consistency in decision making and regulatory approach. Unlike others financial agencies, the CFPB’s rulemaking authority may be set aside by the Financial Stability Oversight Council if the Council finds the rule puts the safety and soundness of the U.S. banking system or the stability of financial systems at risk. In addition, the CFPB’s rulemaking authority is subject to small business consultation requirements before establishing rules that may impact small business. The CFPB’s budget is capped. And, as with all federal agencies, the CFPB is subject to Congressional oversight. These checks strike the needed balance on the CFPB’s authority without restricting its ability to meet the goals of the law.
We respectfully disagree with changing the structure of the CFPB from a single director to a commission and urge Committee members to stand behind a single director to achieve the needed balance and transparency. We look forward to a continuing dialogue with you on this issue.
Respectfully yours,
Pamela Banks
Senior Policy Counsel
Consumers Union, Washington Office
Contact: David Butler or Kara Kelber: 202-462-6262 or Michael McCauley: 415-431-6747, ext 126