- Key insight: GOP lawmakers said temporary executive changes are insufficient, and permanent changes to the Dodd-Frank Act are needed to rein in a future Democratic administration.
- What's at stake: Acting CFPB Director Russell Vought urged lawmakers to eliminate regulatory discretion by more narrowly defining statutory terms like "larger participant" and "abusiveness."
- Forward look: Vought also called on lawmakers to raise the size threshold that triggers CFPB supervision of financial firms from $10 billion to $21 billion of assets.
House Republicans took the unusual step during a hearing last week to explicitly ask for advice from Russell Vought, the acting director of the Consumer Financial Protection Bureau, on how to craft legislation to dismantle the agency's statutory authority.
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At the hearing, Vought stated that the CFPB "shouldn't exist in its current form" and provided a road map designed to curb the agency's reach. Subjecting the CFPB to annual congressional appropriations is the "No. 1 thing" that lawmakers could do to restore "accountability," Vought said.
The hearing highlighted a consensus among committee Republicans that administrative policy rollbacks are not enough. It also underscored Republicans' frustration that the CFPB's statutory authorities have proven durable for the last 15 years, notwithstanding conservative lawmakers' unceasing efforts to undo them.
"What struck me as particularly noteworthy was that Vought himself repeatedly invited Congress to constrain the CFPB's own authority," said Mike Canning, principal and founder of public policy consulting firm The LXR Group and a former senior policy advisor to the House Financial Services Committee during the 2008 financial crisis, which led to the drafting of Dodd-Frank.
"It's unusual to hear the head of a regulatory agency ask lawmakers to write tighter limits on the agency's discretion," Canning said. "To me, that suggests the debate is shifting from short-term regulatory priorities to a much larger conversation about permanently redefining the CFPB's role and institutional design."
House Republicans have crafted more than 100 bills to change Dodd-Frank, but none have passed. Dodd-Frank transferred 18 consumer-protection laws that had been overseen by other agencies to the CFPB, which was created by Sen. Elizabeth Warren, D-Mass., when she was a Harvard Law School professor.
Despite the fact that Republicans control all three branches of government, and have installed Vought at the CFPB, the hearing appeared to cement the view that legislation — rather than administrative shifts — is the only avenue for lasting change.
Vought, who is also the director of the Office of Management and Budget, claimed that the CFPB's independent funding structure creates a "cavalier attitude," at the agency. He suggested that forcing the CFPB to "justify" its budget to Congress annually is the "No. 1 thing" lawmakers can do to restore accountability.
But lawmakers also know that executive-branch actions taken by Vought can be rapidly reversed under a future Democratic administration.
"In order to make permanent changes to the size, powers or leadership structure of the CFPB, there would need to be an amendment to the Dodd-Frank Act, which doesn't appear to be in the cards at the moment," said Chris Willis, a partner at the law firm Troutman Pepper Locke.
Since 2010, Republicans have been unable to pass legislation to amend Dodd-Frank, and experts say they are unlikely to do so with the remaining legislative calendar. A new fiscal year starts Oct. 1, but Republicans are widely expected to lose seats in the midterm elections.
Rep. Frank Lucas, R-Okla., said at last week's hearing that the CFPB needs to avoid what he called "dramatic policy shifts from year to year." He asked Vought to "describe how the committee could partner with you to support … and ensure progress that your leadership has made is truly lasting."
Vought responded by claiming that Dodd-Frank gave the agency wide discretion and that legislation could narrow its reach. As an example, he cited the CFPB's larger-participant rule, which allows the bureau to define 'larger participants,' in a specific market. That authority gives the bureau the ability to supervise large, nonbank financial firms.
Vought also pointed to the definition of "abusive" under Dodd Frank's prohibition of "unfair, deceptive and abusive acts and practices."
"That is where the most danger is," Vought said. "I think you'd want to codify what is a larger participant. I think you'd want to codify what consumer risk is so significant that the CFPB should extend its authority. We would have concerns with the definition of abusiveness under UDAAP. That would be an example where I think that you would want to codify a better definition."
Even as Vought asked Republicans to rein in the CFPB's authority, several Democratic lawmakers called out Vought for neutralizing the CFPB without congressional approval.
"You have slashed your agency without any input from Congress," said Rep. Brad Sherman, D-Calif. "Congress envisioned a robust agency, because we were here, we wrote this bill. You're in the process of trying to cut it by more than a third."
Last year, Republicans capped the CFPB's funding at $446 million in fiscal 2025, down from $785.4 million in fiscal 2024. Vought wants the funding to be much lower at $357 million a year, he said.
The Senate Banking Committee will hold a hearing Thursday to confirm President Trump's nomination of Brian Johnson to be the CFPB's next permanent director. Johnson, a Capital One Financial executive and former No.2 at the CFPB in the first Trump administration, is expected to replace Vought, whose term ends Aug. 1.
House Republicans have drafted bills this session to subject the CFPB to the appropriations process; to change its single director structure to a commission; and to narrow its direct supervisory authority. One such bill would raise the CFPB's supervisory threshold for financial firms from $10 billion to $21 billion of assets.
Rep. Andy Barr, R-Ky., has introduced bills to curb the CFPB's authority over civil investigative demands, which are sent to financial firms at the launch of an investigation, and to scale back one of the CFPB's most potent weapons: the federal prohibition on unfair, deceptive and abusive acts and practices.
Barr expressed frustration last week with his Democratic colleagues, saying the CFPB will continue to have wide pendulum swings in policy depending on the party in power, citing the record of the bureau's past permanent directors.
"If anyone wants to rein in your discretion that you have exercised lawfully, it should be the Congress on a bipartisan basis," said Barr. "Whether it's Richard Cordray or Kathy Kraninger or [Rohit] Chopra or you, sir, my predecessors have given to you in the Dodd-Frank law all the powers that you are now exercising."
"If my friends on the other side of the aisle have given you the power that you have exercised here today, that is precisely why we have offered this reform package today."
