Senator David Perdue Introduces Bill to Rein in CFPB

Senator David Perdue (R-GA) is pushing a bill to rein in the CFPB, a virtually unaccountable independent agency established by the 2010 Dodd-Frank Act that Perdue says “is a rogue agency.”

“The Consumer Financial Protection Bureau was spawned from the disastrous Dodd-Frank financial regulation law,” Senator Perdue says. “Georgians sent me to Washington to help restore accountability and transparency to the federal government, and the CFPB needs a major dose of both.”

“Right now,” Perdue continued, “the CFPB is a rogue agency that dishes out malicious financial policy and creates new rules and regulations at whim without real Congressional oversight. The American people, through Congress, deserve a closer look at the CFPB and how its actions will impact consumers.”

“Additionally,” Perdue added, “the agency itself has failed to operate within its own budget and proven it is more concerned with preserving its own power than protecting the public. Ultimately, I believe the CFPB should be eliminated, but an important first step is bringing it into the light for the American people.”

The aim of Perdue’s Consumer Financial Protection Bureau Accountability Act of 2015 is to place appropriations for the agency under the control of Congress.

One of the unusual aspects of Dodd-Frank is that, in effect, it removed the CFPB from the Congressional appropriations process and gave CFPB what amounts to an unlimited budget.

As Perdue’s office said in the statement released on Tuesday:

Currently, the CFPB operates under the Federal Reserve.

Dodd-Frank established the CFPB’s budget at as much as 12% of the Fed’s annual operating expense. That is roughly $600 million per year without any Congressional oversight over the agency’s spending.

In just one example, when construction cost overruns associated with the agency’s renovations of its Washington, D.C. headquarter caught the attention of the public, Richard Cordray, Director of the CFPB, was unapologetic.

Originally budgeted at $95 million, the most recent estimates place the cost of ongoing renovations at more than $139 million.

CFPB has exercised intrusive, and many argue extra-legal, regulatory intervention in several industries, including most recently the prepaid debit card industry and road construction in Tennessee.

CFPB’s most controversial regulatory activities involve its participation with the Department of Justice in the controversial Operation Choke Point, the Obama administration’s effort to destroy several industries to which it objects on ideological grounds, including payday lending, firearm retailers, and tobacco retailers and wholesalers.

Perdue’s bill is the first significant attempt originating in the Senate this session to control the CFPB. Three other bills have already been introduced in the House.

One, introduced by Rep. Sean Duffy (R-WI), is called the Bureau Advisory Transparency Act. It would require the CFPB to make all its meetings open to the public. This measure passed the House by a wide margin, 401 to 2 in April. That bill has been sent over to the Senate.

As attorney Matthew Orso wrote of the Duffy bill at Law 360 recently:

The bill seeks to make the CFPB subject to the Federal Advisory Committee Act [FACA], which, among other items, requires an agency to hold committee and subcommittee meetings in public. Only three agencies are statutorily exempted from FACA : the CIA, Office of the Director of National Intelligence and Federal Reserve.

Yet, despite the fact that the CFPB is not involved in intelligence gathering or monetary policy, CFPB Director Richard Cordray has taken the position that the bureau is not subject to FACA.

Another bill, introduced in March by Rep. Randy Neugebauer (R-TX), would change the leadership at the CFPB from a single director to a bipartisan commission, similar to the FCC or the FTC.

A third bill, the Bureau of Consumer Financial Protection-Inspector General Act of 2015, introduced by Rep. Steve Stivers (R-OH) and Representative Tim Walz (D-MN) in February “creates the position of an independent inspector general at the CFPB.”

“This legislation will allow for increased oversight of an agency that has been given broad authority. It is important that we take the necessary steps to ensure the CFPB is accountable to the American people,” Stivers said in a February statement.

Neither the Neugebarger bill nor the Stivers-Walz bill have been reported out of their respective House committees.

It is unclear what chance Perdue’s bill has of passing the Senate during this session of Congress, despite its popularity among consumer groups.

In his statement, Perdue cited the support his proposed Consumer Financial Protection Bureau Accountability Act of 2015 has received from several consumer advocacy groups.

The Georgia Bankers Association:

The CFPB makes all the consumer protection rules, and those rules set the tone for compliance examinations of every bank, regardless of bank size and regulator doing the exam. That’s why increased accountability and oversight of CFPB is so important, and we applaud Senator Perdue for his efforts to hold this consumer agency accountable,” said Joe Brannen, President & CEO of the Georgia Bankers Association. “Instead of spending thousands of hours responding to inconsequential concerns that don’t pose significant consumer risks, traditional bankers’ time could be better spent on serving the needs of the families and businesses in their communities.

The U.S. Consumer Coalition:

The CFPB represents the greatest threat to consumer choice and freedom this country has seen in a long time. With the enforcement authority of the DOJ, and the regulatory authority of the FDIC, this unaccountable agency has limitless power to impact the lives of Americans,” said Sarah Makin on behalf of the U.S. Consumer Coalition. “While there may be a role for the CFPB, we applaud Senator Perdue for working to protect consumers from the so-called consumer protector.”

The Taxpayers Protection Alliance:

“Currently, the CFPB operates outside of the jurisdiction of Congress (that most agencies operate in) and continues to be appropriated by taxpayer funds without the proper Congressional oversight. This is an agency that demands scrutiny like any other federal agency and should be held accountable for their actions by moving into the proper process for Congressional appropriations,” said David Williams, President of the Taxpayers Protection Alliance. “Any federal agency operating with the use of taxpayer funds must be subject to oversight by the elected officials that represent those taxpayers in Washington.”

The Electronic Transactions Association:

“ETA supports legislation that balances consumer protections with economic growth and innovation. Senator Perdue’s bill achieves this goal,” said Scott Talbott, Senior Vice President for Government Relations at the Electronic Transactions Association.

Just as the prospects for Senate passage of the Perdue bill are uncertain, so too are the Senate prospects of the relatively uncontroversial Duffy bill passed by the House.

Given his pledge to be “the most transparent President in history,” it would be very difficult for Obama to veto the Duffy bill if it passes the Senate.

But until both houses pass a bill that reins in the CFPB and a conference committee irons out any differences, no legislation will be submitted to President Obama for his signature.

It is almost a certainty, however, that President Obama will veto any bill designed to significantly limit the powers the CFPB, as the Perdue bill does. It seems unlikely both houses of Congress would be able to muster the two-thirds majority required to override such a veto.