Two Texans are leading a fight to abolish the Consumer Financial Protection Bureau, an agency reviled by Republicans since it was created to oversee lending institutions in the wake of the 2008 financial crisis.
The bureau, which is responsible for consumer protection in the financial sector, takes complaints and investigates them on the behalf of consumers. It has been targeted by Republicans as a partisan agency that creates burdensome regulations for financial institutions. It was proposed in 2007 by Harvard law professor Elizabeth Warren before she entered the Senate.
“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,” Cruz said in a statement. “While there’s much more to do to scale back the harmful regulatory impositions of Dodd-Frank, this legislation takes a critical step in the right direction.”
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While there’s much more to do to scale back the harmful regulatory impositions of Dodd-Frank, this legislation takes a critical step in the right direction.
Sen. Ted Cruz, R-Texas
Consumer advocates argue that the bureau has saved billions for middle-class Americans by investigating consumer complaints and getting refunds when it is determined that a financial institution misled its clients.
“The CFPB is designed to be the only agency that protects consumers no matter where they do their financial business. Their powers extend to debt collectors, credit bureaus and payday lenders,” said Ed Mierzwinski, the consumer program director for the U.S. Public Interest Research Group. “It’s designed to create fair rules of the road; 29 million consumers have been the beneficiaries of $12 billion in refunds or other relief from the CFPB.”
The bureau has also been the target of the Trump administration, and the president recently signed an executive order directing federal regulators to revise rules created by Dodd-Frank. Republicans contend the bureau is too insulated from oversight, as the agency’s director is appointed by the president and can be fired only if he or she has done something that warrants dismissal.
“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,” Ratcliffe said in a statement. “While Sen. Cruz and I have been sounding the alarm on the CFPB’s federal overreach for some time now, I’m optimistic at our renewed chances of advancing this effort with a willing partner in the White House.”
Mierzwinski said Cruz and Ratcliffe wouldn’t have the votes to pass their legislation.
“It’s a couple of back-benchers, so it’s doubtful their legislation moves to the front of the line,” Mierzwinski said of Cruz and Ratcliffe. “This is a message bill from pretty extreme people, so it shows they don’t care about governing.”
A third Texan, Rep Jeb Hensarling, also plans to introduce legislation that would significantly weaken the bureau, although it would not abolish it.
“The CFPB has eroded freedom, trampled due process and killed jobs. It must go,” Hensarling said in a recent Wall Street Journal opinion piece.