Winds of change might be blowing in the direction of the Consumer Financial Protection Bureau (CFPB), but it might turn out to be more of a gentle breeze than a full-blown hurricane. On the legislative front, a spending bill for the 2016 fiscal year approved by the Senate Appropriations Subcommittee on Financial Services and General Government would eliminate the direct funding of the CFPB from the Federal Reserve System and instead subject the budget to the annual congressional appropriations process. (Currently spending on the CFPB stands at an annual level of $600 million but this amount is sure to significantly increase as the bureau expands its reach.) The Senate bill would also create a five-member commission to head the CFPB rather than a single director who currently leads the agency. This bill would still have to be passed by both houses of Congress and be signed into law by the U.S. President, probably an unlikely chain of events.
The second congressional development involving the CFPB is legislation introduced by Texas Republicans Senator Ted Cruz and Representative John Ratcliffe and forty-six other representatives to get rid of the bureau entirely. The legislators feel that, rather than help consumers obtain and maintain good credit, the CFPB is just an extension of the Dodd-Frank Act that is an unaccountable runaway regulatory body that functions mainly to impede legitimate commerce. In the even more unlikely scenario that this legislation passes both houses of Congress, the possibility of presidential approval is probably zero.
The last attack on the CFPB is taking place in the judicial system. In 2012, the State National Bank of Big Spring, Texas, brought a lawsuit claiming that the CFPB violates the United States Constitution’s requirement of separation of powers. The action was dismissed for lack of standing at the trial court level the next year but has recently been reversed on appeal by the U.S. Court of Appeals for the District of Columbia Circuit and remanded back to the trial court for possible trial on the merits of the case. It remains to be seen whether the case could somehow eventually make its way to United States Supreme Court. However, given that court’s dismal record on limiting the expansion of the federal government’s powers, there is little chance that five or more justices would ever allow judicial dismantling of a fellow federal organization that has already become part of the political establishment.