Waiting and speculation
With a new president elected, many citizens are expressing growing concern over a multitude of issues, from housing, to equal pay, and everything in between. While it seems to be a bit more prominent with President-elect Trump, this has certainly happened with every newly elected president. The American people want to see just what the new president will do: will he introduce reform? Will things stay the same? Right now, we’re all playing the waiting game, but there is one area in which we have a bit more concern: housing, more specifically the CFPB.
We have long covered the Consumer Financial Protection Bureau (CFPB) and the different policy changes and reforms that have come down the road along the way. On the campaign trail, President-elect Trump vocally shared his dissatisfaction for the Dodd-Frank financial reforms. This makes us wonder what this could mean for the CFPB.
Is the CFPB in danger of being dissolved?
Of course, people opposing the CFPB is nothing new, but it has been making great strides in helping consumers fight back against banks. However, the threat to the CFPB doesn’t reside with President-elect Trump, but rather with the anti-CFPB legislators and the courts.
According to the Consumerist, anti-CFPB legislators have called for Congress to dismantle the agency entirely, but this would prove difficult, as it would likely require legislation that wouldn’t survive a Democratic filibuster in the Senate.
The Consumerist goes on to state that Ed Mierzwinski, of the U.S. Public Interest Research Group, noted anti-CFPB lawmakers would navigate around the possible filibuster by introducing smaller legislative efforts to slowly undermine the Bureau’s authority and its ability to enforce rules that have been deemed “too-restrictive” on the very banks foreclosing on consumers. The only difference now is that these lawmakers no longer, in theory, fear a presidential veto from President-elect Trump. A veto was a concern, along with a lack of majority numbers in the Senate, from President Obama.
Big banks take aim at CFPB
One of the most vocal opponents to the CFPB has been the Chairman of the House Financial Committee, Rep. Jeb Hensarling from Texas. Hensarling is also a potential nominee for Treasury Secretary in President-elect Trump’s administration. This could be detrimental to the CFPB.
Again, according to the Consumerist, Hensarling is also one of the most bank-backed members of Congress, second only to Paul Ryan, whose campaign received more contributions from commercial banks than any other House member.
Keep this is mind: Hensarling’s campaign and leadership PAC received around $1.9 million from the financial and real estate industries in the most recent election.
This accounts for nearly two-thirds of all money raised for the Congressman. This is pretty astounding, and it definitely explains why there is some worry regarding the dissolution of the CFPB.
The courts aren’t happy either
But as I previously stated, the major issues really aren’t with President-elect Trump or Hensarling; rather the big threat could be the courts.
The Director of the CFPB, Richard Cordray, has been a controversial figure since President Obama appointed him (after some protesting from Hensarling and others). As he was appointed for five years in 2013, he could remain Director while President-elect Trump is in office. However, there was a recent federal appeals court ruling that could undermine his position.
The Director of the CFPB is unique in that they cannot be dismissed at will by the president, unlike other agencies where there is either a multi-commissioner panel, or the authority to be removed by the president.
While this may seem unusual, it was put in place to prevent the pressure that regulated parties might try to exercise on the legislative or executive branches of government to get the Director of the CFPB removed.
The federal appeals court recently concluded that the CFPB’s structure is in fact unconstitutional because it gives one person too much authority, and said person is not directly answerable to the president. This could mean Director Cordray will be on the way out in January. If this happens, the law allows for his Deputy Director to assume the position.
However, it is more likely that the Trump administration will have a replacement in mind, and therein lies the problem and worry.
There is one more potential change to keep in mind: Congress wants to make the CFPB more accountable to lawmakers by having funds come through Congress, rather than independently from the Federal Reserve. This has been proposed before, but the potential for it to pass has never been greater than with this administration.
What will happen?
As of right now, the CFPB has paused all pending legislation in response to Trump’s victory.
Bank-backed lawmakers have tried to reform the CFPB before, but have not, by and large, been successful. Some long-awaited regulations, like arbitration rules, are still pending and will likely be dissolved if Cordray is removed from office.
The Hill reports that President-elect Trump has pledged to put a moratorium on new agency rule-makings once he takes office, which could prevent any pending regulations from getting passed.
While this is all still speculation, it seems quite likely that there will be some reform in the CFPB with a Trump presidency, but how much, or to what extent remains to be see for certain. With any luck, once President-elect Trump takes office, he’ll allow the pending regulations to pass, or at least examine them and the strides the CFPB has been making before disallowing them, or completely dissolving the CFPB all together.
What do you think? Will this be the beginning of the end for the CFPB?