In his first month in office, President Trump has signed several high-profile executive orders aimed at meeting a central theme of his campaign – growing the economy. At least two of those EO’s targeted regulations imposed under the Dodd Frank Wall Street Reform Act. Rather than signing an order to kill components of Dodd-Frank immediately, Trump began by slowly releasing two directives intended to ease some of the restrictions placed on financial businesses by the Consumer Financial Protection Bureau (CFPB).
While analysts have said that Trump could make changes to many financial rules without involving Congress, White House Press Secretary Sean Spicer stated that they feel it is better to work with lawmakers in reworking regulations rather than through administrative actions. Earlier in the month, Mr. Trump called Dodd-Frank a “disaster,” and it is fair to say that some congressional Republicans share his view, calling for reform or outright elimination of the CFPB.
While many Republicans have spoken publicly about reforming the CFPB, at least some Senators want to abolish the agency completely. House Financial Services Committee Chairman Jeb Hensarling has been pushing hard for Congress to adopt his CHOICE Act, which will make drastic changes to Dodd-Frank.
Recently, Hensarling reportedly made changes to the Act that would call for the director to become a political appointee that can be removed at will by the president, instead of the five-member panel suggested in previous versions. According to a memo distributed to lawmakers, the changes to the Act would also remove the authority for the agency to bring cases against financial institutions, under what it solely determines as “unfair, deceptive and abusive practices,” and would remove the database of past complaints.
However, there are some in Congress who want the agency shuttered rather than merely reformed. Senator Ted Cruz, R-Texas, and Rep. John Ratcliffe, R-Texas have joined forces to offer a pair of bills that would permanently abolish the agency.
The bills specifically target Title X of the Dodd-Frank Wall Street Reform Act, which gave birth the CFPB and its current structure. At a press conference, Cruz ripped into the agency, claiming that the bureau does little to protect consumers and small businesses. “During the Obama administration, the CFPB grew in power and magnitude without any accountability to Congress and the people, and I am encouraged by the actions President Trump has begun to take to roll back the harmful impacts of an out-of-control bureaucracy.”
He went on to say that the there is much more to do in reducing costly rules that, under the enforcement of the CFPB, slow growth in the economy and financial sector. “The legislation that Rep. Ratcliffe and I are introducing today gives Congress the opportunity to free consumers and small businesses from the CFPB’s regulatory blockades and financial activism, which stunt economic growth.”
After signing executive orders relating to Dodd-Frank regulations, President Trump’s White House National Economic Council Director Gary Cohn told Fox Business Network that the administration intends to attack over-regulation in all markets. However, he went on to say, “[t]oday you’re going to start seeing the beginning of some of our executive actions to roll back regulation in the financial services market.”
Apparently, with the Trump administration continuing to tackle the regulatory overreach coming out of Washington, Cruz and Ratcliff now feel empowered to finally take up the political challenge. Two years ago the pair attempted to unravel the CFPB by introducing a bill aimed at closing the agency by attacking its structure. Ratcliff now believes the time is right, with a willing partner in the White House, to take on the organization that is seen by many on Wall Street and Capitol Hill as an unaccountable government bureaucracy that has been disastrous for consumers.
“The CFPB’s lack of accountability to the American people was quickly evidenced when – contrary to its name – it ended up hurting many of the very folks it was intended to help,” Ratcliff said.
In a widely publicized case last year, between PHH and the CFPB, a federal court held that the structure of the Bureau was unconstitutional and that the single-director setup violates the Constitution’s separation of powers by limiting the ability of the agency director to be removed at will by the president. Since then, the Bureau filed a request to throw out the decision, and the case is now headed to the full U.S. Court of Appeals for the District of Columbia. A panel of 10 judges will hear the case, six of them appointed by Democrat presidents and four of them appointed by Republican presidents.
These two Republicans, however, would like to make that case moot by closing the agency through the legislative process, with Ratcliff adding, “The past several years showed us precisely why massive swaths of federal regulations are never the right solution to help hard-working Americans. President Trump has made it clear he’ll join us in our fight to dismantle Dodd-Frank and finally offer some relief to the small business owners throughout Texas and across the country who’ve been hit hardest by its devastating impact.”