Senate considering several bills to reform CFPB

The bills recently considered by the Senate range from Sen. Mike Crapo’s (R-Idaho) already-passed and House-bound Economic Growth, Regulatory Relief, and Consumer Protection Act to Sen. Ted Cruz’ (R-Texas) Repeal CFPB Act, which does precisely what its label says.

Over the last several weeks, multiple bills designed to alter or abolish the Consumer Financial Protection Bureau have come under consideration in the Senate.

With a new director under a new presidential administration, the CFPB has drawn increased scrutiny from both sides of the political aisle. It seems likely that the bureau will be changing significantly in the near future.

In March, the Senate passed the Economic Growth, Regulatory Relief, and Consumer Protection Act with bipartisan support. Fifty Republicans were joined by 16 Democrats in making many adjustments to the CFPB sphere of operation. That bill now heads to the House where a similar bill is already under consideration. Introduced by Senator Mike Crapo (R-Idaho), the Economic Growth Act raises the Dodd-Frank Act’s threshold for enhanced regulatory standards from $50 billion to $250 billion, freeing 25 of the largest 38 banks in the country from much CFPB regulation. In the housing sector, the bill would exempt nearly 85 percent of mortgage lenders from the reporting requirements of the Home Mortgage Disclosure Act. The bill features many targeted changes designed to release smaller banks from onerous regulation.

The bureau’s administrative structure has long been criticized. Senator Deb Fischer (R-Neb.) has introduced a bill that would replace the CFPB’s single director structure with a five-member, bipartisan commission. A similar bill has been introduced in the House.

Senator Mike Rounds (R-S.D.) has turned his attention the bureau’s funding. Currently the bureau relies upon funds requested by the director from the Federal Reserve. Round’s bill calls for the bureau to be brought under the usual Congressional appropriations process. In addition, it removes control of the bureau’s Civil Penalty Fund from the CFPB director to the Federal Reserve. This would mean that all penalties paid to the bureau would find their way to the general treasury. Senator David Perdue (R-Ga.) has proposed a similar bill.

Perhaps the cleanest proposal comes from Senator Ted Cruz (R-Texas). He introduced a bill under which the CFPB would simply cease to exist. Entitled “Repeal CFPB Act,” the totality of the bill reads: “The Consumer Financial Protection Act of 2010 is repealed, and the provisions of law amended or repealed by that Act are restored or revived as if the Act had not been enacted.” Representative John Ratcliffe (R-Texas) has introduced an identical bill in the House.

Fredrikson & Byron Law