It’s been a rocky five years for the Federal government’s top consumer defender, the Consumer Financial Protection Bureau (CFPB). Since its creation as part of the Dodd-Frank financial reform legislation, the watchdog agency has been mired in scandals that range from spying on American consumers, to massive budget overruns, to racial and gender discrimination. Time and time again, CFPB officials cloistered in the Federal Reserve have refused to be transparent or be held accountable for their spending, their activities and agenda.
Accusations of abuse of power and venturing far beyond its original mandate are well-founded. However, Republicans must realize that doesn’t mean that the original concept doesn’t have value for the American consumer. For their part, Democrats must also come to accept that reforms are necessary to strengthen the agency’s credibility should Republicans recapture the White House next year.
Either way, for the agency to survive and advance its mission of protecting consumers, reform must be enacted prior to the Congressional recess next summer. The political landscape, regardless of who wins the White House, will make it nearly impossible for Republicans to enact the legislation they want to limit the powers of the CFPB, or for Democrats to enact the reforms necessary to strengthen the legitimacy of the agency. If reform legislation is not enacted, American consumers will be stuck with an agency that continues its runaway-regulatory posture while being mired in congressional hearings that have no authority to provide actual oversight.
The original intent for the Consumer Financial Protection Bureau wasn’t to make it a political arm of the White House or some domestic consumer intelligence-gathering organization. It was established to fight fraud committed by the nation’s largest financial institutions and to educate Americans about financial services products so they could make better-informed decisions.
Instead, the powerful ‘consumer protector’ quickly recast itself as a no-holds-barred regulatory agency that duplicates the oversight and enforcement of other agencies that have jurisdiction over the financial services industry. It also has inexplicably undertaken the largest consumer data collection and monitoring program in history impacting virtually every American credit card holder.
Restoring that primary mission is precisely why reform efforts are needed now, before it’s too late.
Congressional Democrats have bucked any suggestion of reform of the agency. Even presidential front-runner Hillary Rodham Clinton has actively campaigned on Capitol Hill against reform this month. This knee-jerk reaction against strengthening the agency by increasing its accountability, transparency and oversight is leaving it with a giant target on its back with an unclear future.
After five years of leadership issues and scandal, the CFPB needs an infusion of integrity and credibility now more than ever. The solutions are clear and supported by large majorities of the public. A U.S. Consumer Coalition/Zogby poll conducted earlier this year found Americans wary of the scandal-scarred agency and supportive of reforms that increase transparency, congressional oversight and realign it to its mission.
With many in Washington questioning the survival of the Republican Senate Majority, now is the time for Republicans to help drive this effort. Senate Republicans have 24 seats to defend in 2016, while Democrats only have 10. The House GOP, while clearly in a stronger position to keep control, faces a likely scenario that the elections will bring them a net loss.
With the 2016 elections looming large, it’s critical for Republicans to be seen by the voting public as taking real steps to rein in the power of the agency and in doing so protect privacy and consumer freedom. For Democrats, supporting reform would demonstrate their commitment to consumer protection and the long-term viability of the agency, especially as part of a potential Republican administration.
These bipartisan goals can be accomplished through three basic changes to the agency’s structure: 1) Move the CFPBbudget under the jurisdiction of the traditional Congressional appropriations process to ensure fidelity to its core mission; 2) Change its governance from a single, unaccountable director to a bipartisan oversight commission; 3) Force the agency to adhere to the same anti-discrimination laws as every other agency and business in America.
Once the Congress recesses for next year’s elections, there will be no political will left in Washington to tackle the issue in a meaningful way. A new Congress in 2017 and a new presidential administration will have a dozen more pressing issues to address and the agency will likely be left to continue to operate in the shadows.
It’s a curious Washington story. The Consumer Financial Protection Bureau we know today turned out to be one of the biggest bait and switch schemes by our government in recent history. Yet, with the right commitment from both sides, it could end up being one of the best examples of bipartisan cooperation at a time when people are yearning for lawmakers to put politics aside and do the right thing.
Doing nothing about the scandal-plagued agency will only allow this game of political football to continue while it even more rapidly creeps away from its core mission, unnoticed and unaccountable. The dangers of that to consumer freedom and the marketplace should be apparent whether you’re a Republican or Democrat.
Brian Wise is the president of the U.S. Consumer Coalition.