Should the CFPB Be Restructured into a Commission?

Financial industry figures met with Senate Democrats on Tuesday February 8 to discuss the future of the Consumer Financial Protection Bureau (CFPB). These stakeholders, described by Morning Consult as “bankers involved in consumer finance,” are supporting a conversion of the CFPB from its current single director structure to that of a bipartisan commission, similar to the Federal Trade Commission. Richard Cordray, a Democrat and former Attorney General of the state of Ohio, currently serves as the Bureau’s director.

This issue has received mixed reactions from the Democratic Party. Prominent Senate Democrats such as Sen. Chuck Schumer (D-NY), Sen. Sherrod Brown (D-OH), and Sen. Elizabeth Warren (D-MA) oppose the proposed structure, on the grounds that Republicans could impair the commission by blocking nominees. Sen. Jack Reed (R.I.), a Senior member of the Committee on Banking, Housing, and Urban Affairs, said, “Don’t change something that works…It’s an agency that has demonstrative, positive results for American consumers.”

Instead, those advocating for the change are looking to convince moderate Democrats who are facing re-election in 2018. The office of Sen. Heidi Heitkamp (D-ND) indicated that she met with officials from the Consumer Bankers Association (CBA) on Tuesday and, in an interview with Morning Consult, Sen. Tom Carper (D-DE)  said, “I’ve been interested in exploring the idea of a commission-like approach.” Carper sits on the Senate Committee on Finance.

Given President Donald Trump’s interest in relaxing financial regulations, it is unclear how the shift to a bi-partisan commission would affect the CFPB. The Bureau has faced criticism in the past for the unintended consequences of otherwise well-intentioned regulations.

It has also taken heat for a leadership structure that has limited Congressional oversight and accountability – the agency gets its funding from the Federal Reserve rather than from a budget approved by Congress. In fact, a federal appeals court ruled in October 2016 that the Bureau’s structure was unconstitutional.


Brian Knight, senior research fellow for the Mercatus Center at George Mason University, discussed the potential of a commission-based CFPB in exclusive comments to Consumers’ Research.

Knight said that “depolarizing” both the CFPB and financial regulation by reforming the agency will lead to a diversity of views at the top. Incumbent director Richard Cordray is a lawyer with a background in law enforcement – Knight noted that it would be helpful to have people leading the CFPB who have a broad array of experience.

Knight noted that the CFTC is a bipartisan commission, and still reaches unanimous decisions. So, deadlock should not be an issue. A bipartisan commission would be a representation of compromise – the commission needs a majority to reach a consensus, so the power is not all vested in one person. In addition, a commission-based agency would allow for greater accountability.

Knight pointed out that dissent votes in a commission can be very helpful, referencing Kara Stein at the Securities and Exchange Commission (who was temporarily the only Democratic commissioner at that organization).

A commission would mean better continuity across administrations. Knight said “Trump will nominate a very different director,” from Cordray. Drastic changes in an agency every four or eight years causes “whipsawing” – policies will change too frequently, which is harmful for consumers.

Knight stated that while opponents to this measure may paint it as a concern of the big Wall Street firms, small banks and financial institutions want this as well. These smaller institutions not only want the CFPB to effectively protect the consumer, but also to preserve consumers’ access to important financial resources.

Read more from Morning Consult.

Read more of Brian Knight’s work on financial services issues at FinRegRag.

Image Source: CFPB

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