The NCUA board would remain at three members and the CFPB’s powers would be even more severely curtailed, under changes to a broad Dodd-Frank overhaul bill being contemplated by House Financial Services Chairman Jeb Hensarling (R-Texas).
The three-member board plan is a change from Hensarling’s original proposal to expand the NCUA board to five members, according to a committee staff memo obtained by CU Times.
The Feb. 6 memo to the “Financial Services Leadership Team” is a laundry list of changes Hensarling wants to make when he reintroduces his Financial CHOICE Act in the coming weeks. The memo dubs the new legislation as “CHOICE Act 2.0.”
Because the memo only discusses changes to Hensarling’s original plan, presumably his proposal to subject the NCUA to the annual appropriations process will still be included in the new plan.
Under the new plan, the CFPB would be restructured as a civil enforcement agency like the FTC. However, unlike the FTC, it would be governed by a single director who could be removed by the president at will.
Hensarling’s original bill called for a five-member CFPB commission.
Currently, the president may only remove the CFPB director for cause, although a federal appeals court has ruled that that structure is unconstitutional.
Hensarling’s memo makes it clear that the structure of the agency ultimately may be decided in court.
The new Hensarling plan would eliminate the CFPB’s power to act based on unfair, deceptive and abusive practices, and it would eliminate databases of consumer complaints.
The agency’s consumer education function also would be removed.
The memo also suggests requiring financial regulators to enter into a memo of understanding designating a lead banking investigator.
The memo does not eliminate the plan to provide credit unions with asset levels of 10% with additional regulatory relief, so that is likely to be retained in the new bill.
Hensarling’s plan faces an uphill battle. President Trump has directed federal agencies to develop plans to loosen the regulatory regime faced by financial institutions.
Hensarling has said that many of Trump’s ideas are reflected in his legislation.
However, while he may have the votes to push it through the House, Senate Democrats have made it clear they will fight any efforts to weaken the CFPB.
And those Senate Democrats wasted no time in panning Hensarling’s CFPB plans.
“The Hensarling proposal would transform the bureau from an effective watchdog into a toy poodle – nice enough if that’s your taste, but not very useful,” said Senate Banking Ranking Democrat Sherrod Brown of Ohio. “They have taken a bad bill and made it even worse.”
That likely will mean that for any Dodd-Frank overhaul bill would need 60 votes to pass the Senate.
