Rep. Byron Donalds has reintroduced legislation to abolish the Consumer Financial Protection Bureau, an Obama-era creation that conservatives have long criticized as a government red-tape factory with no accountability to voters.
“Look no further than the CFPB for the epitome of the Washington Swamp: an unconstitutional, unaccountable and overreaching government agency with no Congressional oversight,” said Mr. Donalds, Florida Republican.
“In addition to the drain of federal resources, the CFPB hinders economic prosperity by imposing burdensome and unnecessary regulations on American consumers,” he said. “It’s high time to eliminate the CFPB once and for all.”
Known as the Repeal CFPB Act, the legislation would eliminate an agency created in 2011 through the Dodd-Frank Wall Street Reform and Consumer Protection Act. The bill was a response to the 2008-09 recession and financial crisis.
The CFPB is funded through the Federal Reserve, not through annual congressional appropriations. The Supreme Court will hear a major case challenging the agency’s funding in the fall, with a decision coming sometime next year.
A federal appeals court ruled last October that the funding mechanism for the CFPB violates the Constitution, but the Biden administration says that rejecting its source of funding could raise “grave concerns” for “the entire financial industry.”
The independent agency has been accused by Republicans and financial companies since its inception of government overreach that overwhelms banks through regulations, limits credit availability and restricts product availability for consumers.
Most recently, the CFPB filed a lawsuit against a small Chicago-area nonbank mortgage firm accusing the company of making “statements that would discourage African-American prospective applicants from applying for mortgage loans” after the owner and other company representatives made comments on a weekly radio program and podcast about neighborhood crime.
Democrats, however, and consumer advocacy organizations say the agency must be a watchdog for unjust and crooked practices in the mortgage markets, student loans and payday lending.
House lawmakers co-sponsoring the bill that would abolish the agency are Republican Reps. Rich McCormick of Georgia, Andy Ogles of Tennessee and Ralph Norman of South Carolina.
Although the legislation does not stand much chance of being brought to the Senate floor, which the Democrats control, Sen. Ted Cruz, Texas Republican, authored a companion bill in the upper chamber.
“The CFPB is an utter and complete waste of government spending and should be eliminated,” Mr. Cruz said in a statement. “It is entirely ineffective and does very little to protect consumers.”
Other House Republicans are seeking ways to rein in the CFPB.
Members of the House Financial Services Committee on Wednesday passed 14 legislative measures, particularly the CFPB Transparency and Accountability Reform Act, which is supported by credit union trade groups.
This legislation, authored by Rep. Andy Barr of Kentucky, would bring the CFPB under the usual congressional appropriations process that other federal agencies are required to go through.
The bill would also change the leadership structure at the CFPB and establish a dedicated inspector general for the agency among other changes. Currently, the CFPB is run by a single director appointed by the president but not confirmed by the Senate.
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