Why All Signs Point to a CFPB Commission
When Donald Trump was elected president, there were reports of the president-elect's intention to do away with the Consumer Financial Protection Bureau altogether. Now, only a week after his inauguration, there are updated reports indicating that one of Trump's goals in his first 100 days is not quite to eliminate the CFPB, but rather the passage of the Republican-led Financial Choice Act.
The Financial Choice Act does make significant changes to the CFPB. It would replace the control of a single director with a bipartisan panel. In addition, it would change the way the CFPB was funded, giving Congress control to strangle the agency's appropriations. There are other details of the Financial Choice Act, including a stay on additional regulations, and proposals that would eliminate disparate impact and unfair, deceptive, or abusive acts or practices laws.
Interestingly, it may very well be that the creation of a panel to replace a single director is a relatively easy political victory for the president. Indeed, with the legal wrangling over Trump's ability to fire the current director on the horizon and the fact that ultimately Trump will be able to appoint a successor in 2018, there may be good reason for Democrats to agree to a panel.
Remember, Sen. Warren's initial concept of the CFPB involved it being led by a panel, and hence it cannot conceptually be considered out of the question. Moreover, Democrats must realize that sooner or later — one way or the other — the CFPB could be led by someone of Trump's choosing. Further, it is no secret that Director Richard Cordray has his sights set on becoming governor and the longer he remains at the CFPB it delays his political future while he languishes in a position where at a minimum his boss is chomping at the bit to get rid of him. Obviously, the area of debate in such a deal would likely center on appropriations and other details, but do not be surprised if the next director of the CFPB is not one person but a handful.
Ari Karen is a partner at Offit Kurman and the CEO of Strategic Compliance Partners.