Some First Thoughts on What the Election Means for the Consumer Financial Protection Commission

by Jeff Sovern

It looks like the Republicans have captured the presidency and both houses of Congress, but that the Democrats will retain enough Senate seats to use the filibuster to block legislation, assuming the filibuster rules don't change.  Filibusters cannot be used to prevent confirmation of most presidential nominees, but can still be used to prevent Supreme Court confirmations, though that may change.  What does all this mean for the Consumer Financial Protection Commission?

This will be the first presidential transition during the life of the CFPB, so we don't have any history to go on.  But here are some quick thoughts. As we previously posted, the GOP platform is very critical of the Consumer Financial Protection Bureau. It says, for example: "The worst of Dodd-Frank is the Consumer Financial Protection Bureau, deliberately designed to be a rogue agency. . . . If the Bureau is not abolished, it should be subjected to congressional appropriation. . . . ." President-elect Trump has expressed disapproval of the Dodd-Frank Act generally, though as far as I know, he has not expressed an opinion about the CFPB specifically. He has also complained about excessive regulation. It thus seems like a real possibility that the GOP will seek elimination of the CFPB.  Unless the filibuster rules change, though, Democrats can block that move.

Another GOP option would be to seek appointment of a CFPB director who would rescind or modify existing CFPB regulations and cease attempts to promulgate new consumer protections. The Dodd-Frank Act provides that the director will serve a five-year term and can be removed only for cause.  But the DC Circuit’s PHH decision removed the “for cause” limit, meaning that unless that decision is stayed, the new president could fire the director on day one.  Even if PHH is stayed or overturned, the term of the current director, Richard Cordray, expires in 2018, or he may choose to leave before then, perhaps to run for office. President Trump could nominate a new director, and under the existing rules, the Senate Democrats could not use the filibuster to block that nomination without Republican help.

Another possibility is that Congress shifts the CFPB to a commission structure, with no more than three members of the commission from the same political party, as some Republican law-makers have proposed and as is true of other federal administrative agencies, including the Federal Trade Commission.  That would presumably address the concerns of the PHH court.  Democrats might possibly agree to that as a compromise measure.  But whether Republicans would still want to do that in light of their victories remains to be seen. If that were the result, the CFPB would be less effective and slower to remedy consumer problems.  But it would still be half a loaf.