The Trump administration is turning its attention to the Consumer Financial Protection Bureau, which it has long targeted for disassembly and disposal. The Treasury Department is expected to release a lengthy report this week recommending ways to rein in the agency's powers to police banks and other financial services.
The report, the result of an executive order issued by Trump in the first weeks of his tenure, is harshly critical of the CFPB and recommends it be stripped of its authority to examine financial institutions, according to a report in the Wall Street Journal.
The Treasury Department report, said to be about 150 pages long, also recommends giving the President the authority to fire the director of the CFPB at will, an issue that is presently being argued in the courts.
Since its formation in 2010 as part of the Dodd-Frank Act, the CFPB has been headed by Richard Cordray, who earned a reputation as a staunch consumer advocate while serving as attorney general of Ohio. Under Cordray's leadership, the bureau has collected billions of dollars in penalities and restitution from major banks, mortgage lenders, payday loan operations, and debt collectors for violating consumer protection rules.
The Dodd-Frank Act was passed by Congress to remedy some of the conditions that were seen as contributing to the 2008 financial meltdown. It restricts banks' ability to engage in speculative activities and tightens mortgage requirements. Small banks say the restrictions have made it difficult for them to survive, and real estate interests say the tighter mortgage regulations have contributed to a slowdown in the housing market.
Any changes recommended by the report would require action by Congress. House GOP leaders have advocated scrapping the CFPB entirely, but the Senate is not likely to go along with that.
Besides the possibility of legislative action, the CFPB is fighting a lawsuit that argues its structure is unconstitutional. Consumer advocates and a coalition of 17 state attorneys general have filed motions supporting the bureau, saying it is part of a "powerful enforcement partnership" with the states.
"The CFPB is the cop on the beat, protecting Main Street from Wall Street misconduct," said Connecticut Attorney General George Jepsen. "It was structured by Congress to be a powerful and independent agency that would protect consumers from the abuses of Wall Street, banks, and other large financial institutions."
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