It would be easy to look at the Republican victory in nullifying the CFPB’s mandatory arbitration rule as a sure sign that the political clout of the agency is weakening and that it’s just a matter of time before it’s defanged and powerless.
But that’s not the case at all.
Yes, the agency was dealt its first real defeat recently when Republicans, backed by credit union trade groups and others in the financial community, voided the agency’s rules that restricted the use of mandatory arbitration clauses in financial contracts.
But in dealing the agency that blow, Congress used the Congressional Review Act, which can only be used in very limited cases immediately after an agency rule is issued.
That allowed CFPB opponents to push the nullification rule through the Senate with 51 votes.
And that’s exactly what they got. Vice President Mike Pence broke a 50-50 tie, allowing the resolution to pass.
Using the CRA is “a pretty drastic measure,” according to Ryan Donovan, CUNA’s chief advocacy officer.
And he said he wondered if Republicans would have gotten even 50 votes for the regulation had the CFPB crafted the rule better (for instance, by leaving out credit unions).
The CRA can’t be used in any legislation to make general changes to the CFPB. For instance, Republicans have been talking about taking away the agency’s enforcement powers. They can’t do that with the CRA.
Any serious attempt to defang the CFPB would likely take 60 votes to get through the Senate, since Democratic supporters of the agency would threaten to filibuster legislation.
Now, Sen. Ted Cruz (R-Texas) had talked about trying to repeal Dodd-Frank through the budget reconciliation process – a move that would allow the repeal to get through the Senate with 51 votes.
But that was all talk. Cruz made no serious legislative attempt to do it.
So, folks, the CFPB is not going anywhere soon.
As Donovan said, “There’s still a lot of space between Democrats and Republicans on CFPB issues.”
But What About Cordray?
Around Labor Day, there was a lot of talk that CFPB Director Richard Cordray intended to quit any minute and go home to Ohio to run for governor.
But with each passing day, that’s becoming less likely.
Ohio Democrats have said they consider Labor Day to be the start of political campaign season. So even though he faces a filing deadline of early next year, Cordray missed the unofficial deadline for campaigning.
So, what’s going to happen with Cordray, the GOP’s favorite punching bag?
Well, his term ends next summer, so he may stick around until then.
Or, the U.S. Court of Appeals for the District of Columbia could decide the makeup of the agency is unconstitutional because Dodd-Frank says Cordray can only be removed for cause.
If that’s the case, then President Trump could fire Cordray immediately.
Or, if the ruling doesn’t come soon, or if Trump thinks he has cause to fire Cordray, he could simply do it.
Republicans have been urging Trump to fire Cordray since the early days of his administration, but he hasn’t done it yet.
Stay tuned.
The Empty Seats
You may recall that there are two vacancies on the NCUA board. The seat formerly held by Debbie Matz remains vacant and the term of fellow Democrat Rick Metsger expired in August.
A couple of months ago, sources indicated it would be late fall before either seat is filled.
Well, now, the timetable may have slipped even more and it may be the end of the year before candidates are nominated.
Metsger, who can serve until a replacement is confirmed, so far has been willing to continue his term on the board. But obviously at some point, he’s going to want to find a position with a bit more job security.
There’s precedent for the board to have a single member, but when that has occurred, the single member has been a caretaker who simply manages the agency and does not push any new initiatives.
It’s still likely that Trump will announce the two nominees together – one Democrat and one Republican. The Democrat is likely to fill Matz’s term and the Republican is likely to fill Metsger’s seat, which would give that nominee a full term on the board.
Pairing two nominees – one from each party – often eases the confirmation process.
And as we’ve seen, the Senate leaders need every tool at their disposal to get nominees confirmed by the Senate.
Face Time? Nah
Earlier this year, some folks in the credit union community were wringing their hands and gnashing their teeth over the fact bankers had had TWO meetings with Trump and credit unions had had none.
Well, maybe that’s not such a bad thing after all.
Trump has demonstrated a unique ability to play nice with folks like Senate Majority Leader Mitch McConnell (R-Ky.) and then bash them once they leave the White House grounds.
So, a face-to-face meeting will not guarantee support for credit unions.
Then there’s the desire to have the photo of yourself with the Commander-in-Chief.
With Trump’s approval ratings hovering below 40%, a photo with the president may not impress too many people.
David Baumann is a Correspondent-at-Large at Credit Union Times. He can be reached at dbaumann@cutimes.com.
