In the summer of 2007, then-professor Elizabeth WarrenElizabeth WarrenCurt Schilling to Jake Tapper: How can Jews be Democrats? Small donors aren’t revolutionizing Congress. At least not yet. Peter Thiel bet on Trump, but the tech titan still comes out a winner MORE first called for the creation of a new independent financial regulatory agency modeled after the Consumer Product Safety Commission with a mission to protect consumers. “If it’s good enough for microwaves, it’s good enough for mortgages,” Warren wrote. Two years later, the Obama administration released a Treasury white paper, and later a draft bill, calling for a Consumer Financial Protection Agency with a director and a board that would represent a “diverse set of viewpoints and experiences.” In Congress, Sen. Richard DurbinDick DurbinGreat Lakes senators seek boost for maritime system Wikileaks: Durbin pushed unknown Warren for Obama bank regulator The Hill's 12:30 Report MORE’s (D-Ill.) Financial Product Safety Commission Act was included in the House version of the Dodd-Frank Act before inexplicably being removed by the Senate at the 11th hour.
From the very beginning, Sen. Warren (D-Mass.) and other supporters intended to structure what is now the Consumer Financial Protection Bureau as a bipartisan commission. Unfortunately, the dedication to a consumer agency led by a diverse board or commission did not last, and the CFPB that Congress created is headed by a single director. In this regard, the new CFPB is unlike most financial regulators in Washington, including the Federal Reserve Board, Federal Deposit Insurance Corp., Securities and Exchange Commission, and National Credit Union Administration.
The purpose of the CFPB is to protect consumers and promote fairness and transparency in financial products and services. However, putting a single person in charge leaves the Bureau vulnerable to the political whims of the White House, which appoints the CFPB director. If the president appoints someone who doesn’t believe in consumer protection, “you get nothing,” Dodd-Frank architect Barney Frank recently said. Rep. Brad Sherman (D-Calif.) and former Rep. Brad Miller (D-N.C.) have expressed similar concerns. Sadly, dramatic swings in policy based on the party in power will only cause confusion, instability and uncertainty at an agency whose reach has a significant impact on consumers, the financial industry and the economy.
Some Democrats are thinking about protecting consumers for the long haul. The Financial Product Safety Commission Act (H.R. 1266), which would transition the CFPB’s governing structure to a bipartisan commission, has received support from Democratic Reps. Kyrsten Sinema (Ariz.), David Scott (Ga.) and Brad Ashford (Neb.). Those who are supportive rightly see that an agency that allows for transparent, robust debate from multiple experts is more likely to preserve consumer choice and strengthen consumer access to credit.
There are many examples where more transparent debate may have actually protected consumers or preserved access to credit. Democratic members of the Florida congressional delegation, including Democratic National Committee Chairwoman Rep. Debbie Wasserman Schultz, recently wrote that the bureau’s proposed payday lender rule is a bad example of its “one-size-fits-all” policy. Rep. Carolyn Maloney (D-N.Y.) and more than 100 Democrats this summer expressed concerns with the CFPB’s tight TRID deadline, with Sherman introducing bipartisan legislation to provide a hold harmless period for financial institutions working in good faith to comply. Additionally, 57 Democrats have signed onto a bill that recently passed the House Financial Services Committee to express concern with the CFPB’s scope over auto dealers—a group that was specifically excluded from CFPB jurisdiction under the Dodd-Frank Act.
These are just three very recent examples where a commission would have prompted more thorough deliberation with diverse viewpoints. The resulting certainty and stability afforded by a commission is good for consumers, the industry, and the economy.
The CFPB has established a foundation of consumer protection and has returned money back to consumers harmed by financial products or practices. However, the CFPB’s work over the past four years and its mission is in jeopardy if a stable, bipartisan board is not put in place. A bipartisan commission is not only good policy, but it is smart politics. It would ensure the agency is around not only for the next administration, but for the next generation of consumers.
Members of Congress resistant to the commission structure must ask themselves this pivotal question: Am I willing to risk the very existence of the CFPB tomorrow because I am unwilling to support a bipartisan board today?
Keating is president and CEO of the American Bankers Association; Korsmo is CEO of the American Land Title Association; Hunt is president and CEO of the Consumer Bankers Association; Nussle is president and CEO of the Credit Union National Association; Fine is president and CEO of the Independent Community Bankers of America; and Berger is president and CEO of the National Association of Federal Credit Unions.