A day of reckoning has arrived for Elizabeth Warren’s favorite regulator.
Republicans -- as well as many lobbyists -- have long vilified the controversial Consumer Financial Protection Bureau for having scant accountability and writing rules that harm banks. Next year when the party controls both the U.S. Congress and White House, they’re finally in a position to do something about it.
President-elect Donald Trump could sign legislation proposed by Republicans that would put the agency under Congress’s thumb. Lawmakers could also overturn specific CFPB regulations, including one loathed by the industry that made it easier for consumers to sue their banks.
Most importantly, Republicans are poised to get the chance to replace the CFPB’s aggressive leader, Democrat Richard Cordray. His term is up in 2018, but Trump may be able to replace him even sooner if a recent court ruling is upheld that gave the president more leeway to oust the agency’s director. Trump would be expected to replace Cordray with someone far less interested in pursuing tough oversight.
In Jeopardy
“For many years now we have been trying to work with Elizabeth Warren and Senate Democrats to craft a bipartisan solution in case this very scenario happened,” said Richard Hunt, head of the Consumer Bankers Association, a banking lobbying group. “I wish they would have taken our deal because now they put the future of the CFPB at jeopardy.”
But Republicans will have to tread the politics of going after the CFPB carefully. It’s arguably on a high note after leading other agencies in imposing a $185 million fine on Wells Fargo & Co. over its bogus account scandal. While Republicans have joined Democrats in criticizing Wells Fargo, they’ve also aggressively questioned why regulators didn’t stop the alleged wrongdoing sooner.
Regardless, Senator Warren of Massachusetts and other progressive Democrats will be on the defensive. There are procedural ways for senators to try to block legislation, and Warren has already said she would protest any changes Trump seeks to make to the agency she helped create. But the fact that Congress isn’t needed at all for Republicans to make drastic changes to the leadership and direction of the CFPB might put pressure on Democrats to agree to some changes for the agency. It’s possible Republicans could even try to drop something in a must-pass spending bill this year before Trump’s presidency even begins.
“There are some very clear implications,” said Raj Date, the CFPB’s first-ever deputy director. The prospect that Trump could have his pick of directors “is enough to prod the desire for a bipartisan solution."
Dismantle Dodd-Frank