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House Being Lobbied to Enact Law Changing CFPB Leadership Structure

A lobbying effort has begun on Capitol Hill to persuade the House of Representatives to enact legislation that would change the leadership structure of the Consumer Financial Protection Bureau to a five-member commission from its current one-person-at-the-top formation.

The movement began after the House announced its plan to defend the single director structure in the case of Seila Law v. CFPB. The CFPB has already come forward and said it essentially agrees with the argument that a single director who can only be fired for cause is unconstitutional and should be changed, either to a multi-member commission or by giving the president the power to fire the director for any reason.

The Consumer Bankers Association earlier this month sent a letter to House leaders urging them to enact legislation that would change the leadership structure because the current structure leaves “financial instructions with few assurances that the rules they are complying with today would remain in place” every time a new director is appointed.

“Replacing the sole director model with a bipartisan, Senate confirmed, five-person commission would depoliticize the CFPB while increasing stability, accountability and transparency for all consumers and industry stakeholders,” the CBA wrote. “A lack of certainty and long-term consistency in leadership at the Bureau adversely affects consumers, our economy, and the financial services industry. As we saw after the departure of Director Cordray, the CFPB’s current governance structure is subject to dramatic political shifts and strains with each change in presidential administration. Unpredictable political shifts make it difficult for the financial services industry to plan for the future, which ultimately stifles innovation, limits access to credit, and hurts consumers.”

Proponents of the changes being sought by the CBA are looking for a leadership structure similar to the Federal Trade Commission or Federal Communications Commission, which are headed by a chairman, along with four other commissioners. The political party in charge of the White House has the opportunity to nominate individuals who share the same political views when a commissioner’s term expires, and the party in charge of the White House usually has a one person majority among the five commissioners, ensuring viewpoints from both sides of the aisle are heard.

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