After the 2008 financial crisis, the 2010 Dodd-Frank Act rightly consolidated overlapping and murky regulatory responsibilities into a single, new federal agency—the Consumer Financial Protection Bureau.
Unfortunately, while the CFPB was intended to be an independent federal agency free from the polarizing political games that gridlock Washington, its current leadership structure, with a single director, makes it susceptible to those very influences. But a single director was not always the intention of policy makers.
In 2007 then-Harvard law professor and now Sen. Elizabeth Warren conceived of a “Financial Product Safety Commission,” governed by five bipartisan commissioners, to oversee the safety of consumers in the financial marketplace. Her idea was to ensure a single federal regulator was responsible for protecting all consumers.
In June 2009 the Obama administration released a white paper on financial regulatory reform. It also advocated a consumer financial protection agency led by a five-person, bipartisan commission.
That same year, both authors of the Dodd-Frank Act, then-Rep. Barney Frank and then-Sen. Chris Dodd, also supported a bipartisan, five-person commission to head the CFPB.
Unfortunately, as the Senate’s version of Dodd-Frank proceeded through significant negotiations, a political decision was made to centralize the power of the agency in a single individual. With the Senate in the driver’s seat for leading the legislative efforts, the commission structure, favored by the House, disappeared.
A single-director structure solidifies the policy positions of the political party in charge of the White House. Either Republican or Democrat, a single director will generally carry out his or her president’s wishes and approach the job in a partisan manner. A bipartisan commission allows for greater diversity of viewpoints, forcing more dialogue and a more balanced approach to rule-making.
This isn’t a novel concept. There is bipartisan leadership at the Federal Trade Commission, the Securities and Exchange Commission, the Commodities Futures Trade Commission, and the Consumer Product Safety Commission.
We believe consumer protection is critical to a well-functioning and sustainable financial marketplace, and the CFPB has an important role to play. To ensure a stable and deliberative regulatory process, the agency should be insulated as much as possible from the whims of partisan politics. A bipartisan commission leadership structure is best to achieve this outcome.
A commission structure at the CFPB would promote predictability in rule-making by preventing a new director from unilaterally and abruptly reversing the decisions made by a previous director. It would also help to reduce the risk of regulatory capture, as it is easier for special interests to inveigle one person than five.
We’ve come together on this issue to protect American consumers and ensure that individuals and families continue to have access to the financial products they rely on. We urge our colleagues in Congress to join this bipartisan initiative and work with us to restructure the leadership of the Consumer Financial Protection Bureau.
Mr. Neugebauer, a Republican, is a representative from Texas. Ms. Sinema, a Democrat, is a representative from Arizona.