Recently, the second-most powerful court in the country ruled that the Consumer Financial Protection Bureau (CFPB) had been structured in an unconstitutional manner. This ruling is an important step toward protecting consumers and community banks that are such an integral part of our economy.
The CFPB was created by the Dodd-Frank legislation passed by the Democrat-controlled Congress and signed into law by President Obama in the wake of the financial crisis that began in 2008. While there was clearly a need to reform aspects of the financial services industry, CFPB and other executive agencies have issued heavy-handed regulations that have harmed community banks and hindered economic growth.
Consumers deserve to operate in a fair marketplace. The controversy at Wells Fargo, where employees secretly opened unauthorized accounts without their customers’ knowledge in order to meet sales goals, demonstrates why we need effective and responsible oversight.
Unfortunately, the CFPB has been riddled with problems since its inception, and it is not accountable to Congress or the American people. It was established as an independent agency with an unaccountable director who is appointed by the President to a five-year term and can only be fired “with cause.” This is in contrast to most other independent agencies which have multi-member boards with a bipartisan makeup. The lack of accountability at CFPB is troubling because this agency makes rules and regulations that impact the lives of millions of Americans.
Arkansans understand that part of the role of government is to provide responsible oversight, but as is often the case, executive agencies can overreach and cause more problems than they solve. The CFPB has been issuing regulations that prevent small community banks from providing the support and services necessary for small businesses to effectively operate, create jobs and stimulate economic growth. As the chairman of the Appropriations Committee’s Subcommittee on Financial Services and General Government, I have met with Director Richard Cordray to stress the need to provide our community banks with flexibility, as Dodd-Frank’s one-size-fits-all approach to regulating our banks is not the answer.
While the court did not order CFPB to disband, its ruling does curb the agency’s power. This is a major win for small businesses and community banks and will bring more oversight to the actions of CFPB. Our next president will be able to remove the CFPB director at any time, an important tool for reining in federal agencies that abuse their regulatory powers.
I welcome the court’s decision and hope it is upheld should it be heard before the Supreme Court. I look forward to continuing to work with my colleagues to reform CFPB so that the agency is accountable to Congress and the American people.