This week, the House of Representatives will consider H.R. 3193, the Consumer Financial Protection and Soundness Improvement Act of 2013. The bill, which was approved favorably on a party-line vote in the Financial Services Committee, seeks to broadly reform how the Consumer Financial Protection Bureau (CFPB) operates.
Originally, H.R. 3193 only allowed the chairman of the Financial Stability Oversight Council (FSOC) the ability to set aside any regulation issued by the CFPB. However, House Republicans have combined four other pieces of legislation into H.R. 3193 aimed at curbing the powers of the CFPB. These provisions include: replacing the CFPB’s single director with a five-member commission; establishing the CFPB as an independent agency subject to the annual congressional authorization and appropriations processes; altering the pay scale of CFPB employees; and imposing limits on consumer information that CFPB collects.
Currently, the CFPB operates as a Bureau under the Federal Reserve, and is exempt from the Congressional appropriations process, which is strongly influenced by House Republicans. Under the current statute, the CFPB received $541 million in FY 2013, and is requesting $497 million for 2014 fiscal year. The proposed legislation would change the CFPB’s name to the Financial Product Safety Commission to demonstrate its independence from the Federal Reserve and limit both its FY 2014 and FY 2015 budget to $300 million each year.
The bill also restructures the makeup of the CFPB, replacing its single director with a new five person commission. Under the bill, four of the five new commissioners would be appointed by the President and be subject to Senate confirmation. Two of each of these appointments would be required to be of different political parties. The final appointment would be given to the Federal Reserve’s vice chairman for supervision. Commissioners would serve five-year terms that are staggered and could stay on the job for up to one year after their term expires until a replacement is approved by the Senate.
As long as Democrats continue to hold the majority in the Senate the bill has little chance of passing. While the White House has yet to formally release an official Statement of Administration Policy on the Consumer Financial Protection and Soundness Improvement Act, the Administration opposes H.R. 3193 and the President would likely veto the legislation. If Republicans are able to gain majority control of the Senate in the 2014 midterm elections, this issue is likely to be reconsidered. The House of Representative is scheduled to begin consideration of the Consumer Financial Protection and Soundness Improvement Act on Tuesday, February 11, 2014