Let the CFPB do its job

In less than two years, the Consumer Financial Protection Bureau has enacted sensible, clear rules for safe mortgage loans and mortgage servicing, secured $425 million in consumer refunds and $70 million in fines for abusive financial practices, provided clear information for consumers, and established an effective consumer complaint system.



Despite CFPB’s record of swift, effective action, opponents — like the U.S. Chamber of Commerce, which sought to kill the agency before it even got started — continue to propose “fixes” to CFPB that will do anything but that.

ADVERTISEMENT
Having a single director has enabled the Bureau to quickly get to work.  Notably, it has met its deadlines under Dodd-Frank, while commission-led agencies have struggled to do so. CFPB’s opponents prefer a commission with members chosen by party leaders and subject to the current gridlock that characterizes the Senate confirmation process. This approach would delay actions and subject decisions to partisan bickering. The current impasse over a director would turn into an annual event when a commissioner came up for confirmation.



Here is the experience of Nancy Nord, a Republican commissioner with the U.S. Consumer Product Safety Commission (CSPC) and its acting chair from 2006-2009: "A well-informed administrator with sole accountability for decisions is a better way to achieve underlying policy goals, rather than hoping for clear-headed bi-partisanship. My experience at the CSPC indicates that commissioners' independence is more hope than reality.  In non-unanimous votes, crossing party lines is rare."



The CFPB’s financial independence has and will allow it to pursue fair rules without industry blocking it with special budget provisions or limitations. This wouldn’t be the case if CFPB’s budget were subject to the annual congressional appropriations process. Federal bank regulators have independent funding because of this need for effective oversight of financial institutions, and both the Office of the Comptroller of the Currency and the Federal Housing Finance Agency operate with a single director.



These are the reasons why in 2008, when the Federal Housing Finance Agency was established, lawmakers from both parties demanded that it have a single administrator and independent funding- so that it could effectively do its job. CFPB in fact has significant checks that other agencies do not, such as that its funding is capped and a council of other regulators has the ability to veto its regulations. Finally, if Congress doesn’t like something that CFPB does, it can certainly overrule it.
 


The only thing these moves to gut CFPB are doing is adding more uncertainty to the mortgage and financial markets, and they need stability and clarity more than ever. 



The financial crisis wrought by bad lending practices brought the near collapse of our financial system, and it revealed flaws in our markets. CFPB should be allowed to do its job of helping our markets work better through establishing greater transparency and common sense rules of the road. Responsible businesses and our nation’s families need nothing less.


Henderson is president of the Leadership Conference on Civil Rights. Calhoun is president of the Center for Responsible Lending.