A bill currently under debate in the U.S House of Representatives would significantly reform the Consumer Financial Protection Bureau (CFPB).
H.R. 3193, the Consumer Financial Freedom and Washington Accountability Act, sponsored by House Financial Services Committee member Rep. Sean Duffy, R-Wis., aims to bring greater accountability and transparency to the bureau.
If approved, the bill would replace the CFPB's single director position with a five-member commission that would oversee the bureau's operations.
Members of the commission would be appointed by the president and confirmed by the Senate ‘to ensure that a diversity of viewpoints inform the CFPB's regulatory and enforcement agenda, and to conform the CFPB's governance to that of other federal agencies charged with consumer or investor protection,’ according to a statement on Rep. Jeb Hensarling's, R-Texas, website.
Hensarling is chairman of the House Financial Services Committee, which has already approved the bill.
In addition, the bill would subject the CFPB to the regular appropriations process and makes it a stand-alone independent agency, rather than a bureau within the Federal Reserve System. Currently, there is no congressional oversight of the bureau's spending – although it does have a set budget.
The bill would also prohibit the CFPB from using consumers' personal financial information without their knowledge and consent. Recently the CFPB announced that it was expanding the information mortgage lenders are required to report under the Home Mortgage Disclosure Act (HMDA). In addition to basic information such as the name of the lender; the type and general location of the property; and the race, ethnicity and sex of the applicant, the bureau wants to add new information including the length of the loan, total points and fees, the length of any teaser or introductory interest rates, and the applicant or borrower's age and credit score.
The bill would also prevent the CFPB from undermining the safety and soundness of U.S. financial institutions through regulatory overreach.
Finally, the bill would set the salaries for CFPB employees in accordance with the General Services (GS) scale. According to a July 2013 report in the Washington Examiner, 54 CFPB employees have annual salaries that are higher than $200,000.
‘These are modest, common-sense reforms that bring a modicum of accountability and transparency to the CFPB,’ says Hensarling. ‘We know that this is an agency that was designed to be unique, if not perhaps rogue; it is an agency like no other. Arguably it is the single most powerful and least accountable Federal agency in the history of our nation and thus demands rigorous oversight.
‘The American people deserve better,’ Hensarling adds. ‘They now have witnessed a failed stimulus plan, trillions of dollars of unsustainable debtâ�¦ revelations of NSA domestic data collection and a broken promise of 'if you like your health insurance, you can keep it.' The American people rightfully demand accountability from this administration, and H.R. 3193 is a step in the right direction.’
Hensarling also points out that the CFPB came under scrutiny recently for planning to spend $145 million on office renovations for a building it does not even own.
Even if the Consumer Financial Freedom and Washington Accountability Act passes in the House, it is not expected to gain approval in the Democrat-controlled Senate.