On February 3, President Trump signed an executive order directing the Treasury Secretary to review the Dodd-Frank Wall Street Reform and Consumer Protection Act. Trump earlier characterized Dodd-Frank as “a disaster” and said that his administration would work to cut “a lot out of” the 2010 law.
House Financial Services Committee Chairman Jeb Hensarling (R-Tex.) issued a statement praising the President’s order. “When Dodd-Frank was passed, Americans were promised a healthier economy, an end to bailouts and better consumer protections,” Hensarling wrote. “Instead, we have the weakest recovery in history, a guarantee of more Wall Street bailouts, and consumer costs have gone up while their choices have gone down. Today the big banks are bigger and the small banks are fewer. Everything from mortgages to credit cards to monthly checking fees costs more because of Dodd-Frank’s red tape, if consumers can even get access to them.”
The struggle over the Consumer Financial Protection Bureau continues, as well. The D.C. Circuit’s ruling in PHH Corp. v. Consumer Financial Protection Bureau that imposed “for cause” restrictions on the President’s ability to remove the CFPB director is currently on hold pending en banc review. As we noted earlier, a number of Democratic attorneys general moved the Court to intervene in the case, citing concerns that the Bureau would abandon the appeal. Sen. Sherrod Brown (D-Ohio) and Rep. Maxine Waters (D-Cal.) filed a motion to intervene, as well. In a short, per curiam opinion, the Court denied these motions.
Meanwhile, in the Senate, three Republican senators introduced a bill that would moot the PHH appeal. The Consumer Financial Protection Board Act would replace the current single-director structure of the Bureau with a five-member Board of Directors that would be appointed by the President and approved by the Senate. Board members would serve five-year, staggered terms, and no more than three members of the Board could be members of the same party. The bill stipulates that each Board member must “have developed strong competency and understanding of, and have experience working with, financial products and services.” Furthermore, the bill provides that the President may remove Board members for “inefficiency, neglect of duty, or malfeasance in office.” The House of Representatives has undertaken a similar endeavor in the Financial CHOICE Act, which would repeal and replace Dodd-Frank, and also proposes a five-member committee to replace the current CFPB structure.
We will continue to monitor the pending changes at the CFPB.