The U.S. House of Representatives began debate last week on legislation introduced by Rep. Sean Duffy (R-Wis.) that would implement a number of reforms to the CFPB, including replacing the director with a five-member panel.
The legislation—the Consumer Financial Freedom and Washington Accountability Act—was introduced after reports surfaced that the CFPB is collecting American consumers’ financial data.
Duffy’s bill would replace the CFPB director with a bipartisan five-member commission and change the voting standard established for the Financial Stability Oversight Council from the two-thirds majority vote to a simple majority vote.
Additionally, the bill would establish the CFPB as an independent agency and would subject the consumer watchdog to the congressional appropriations process. The CFPB currently draws its budget from the Federal Reserve as a fixed portion of the central bank’s total operating expenses.
“The CFPB is collecting data and information on almost one billion credit cards, and I would ask, ‘Do you think they’ve asked permission of the American people to take their financial data?’” Duffy said during the House hearing on Wednesday. “Absolutely not. All we ask for in this reform bill is, if you want to take America’s financial information, and you say that you’re here to protect the American citizenry, well why don’t you ask them?”
The Congressional Budget Office estimated that the legislation would increase direct spending by $5 million between 2014 and 2024 due to additional staff costs associated with the new rulemaking requirements, adding that the cost “in any given year would not be significant.”
The American Bankers Association has expressed support for the changes, saying “there needs to be an effective check and balance on the [CFPB’s] authority.”
“ABA strongly supports the principle of accountability and balance, and commends the sponsors of this legislation for working to improve the accountability of the Bureau and the Director,” the ABA said in a letter to the House last week. “We… urge the House to support passage of H.R. 3193.”
President Obama, however, has vowed to veto the measure, saying the bill would “undermine critical Wall Street reforms and weaken important consumer protections, potentially exposing the nation’s economy to systemic risks similar to those that led to the 2008 financial crisis.”
The White House said the replacement of the CFPB director with a five-member panel would “significantly limit” the watchdog’s ability to “respond effectively” to rapid changes in the financial products and services market.