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Five Director Board to Rule CFPB if New Senate Bill Becomes Law

  • Written by T. Steel Rose

As President Trump considers former Rep. Randy Neugebauer, R-Texas to run the CFPB, Senators Deb Fischer, R-Nebraska; John Barrasso, R-Wyoming; and Ron Johnson, R-Wisconsin, introduced a bill in the Senate to replace the single director of the CFPB with a five-member bipartisan committee.

This new bill, the Consumer Financial Protection Board Act, could change the leadership structure of the CFPB. The proposed leadership structure of the CFPB would be a five-member board of directors. The directors would be appointed by the president and approved by the Senate.

The president would appoint one of the five members of the board to serve as chairperson of the board and the CFPB board members would serve staggered five-year terms. Board members could be removed for “inefficiency, neglect of duty, or malfeasance in office.”

The goal of the bill is to bring accountability to the bureau. The House of Representatives is also considering replacing the single CFPB director with a committee as part of the Financial CHOICE Act, a bill which would repeal and replace the Dodd-Frank Wall Street Reform Act.

The constitutionality of having one director rule the CFPB is already the subject of litigation in Court of Appeals in the D.C. circuit, the second most powerful court in the U.S. In a 2-1 decision the Court ruled the CFPB had to re-review an enforcement action it took against PHH Corporation. The Court of Appeals determined the CFPB director can not only be removed “for cause” by the president but instead could be removed “at will.” The CFPB appealed the ruling asking the Court to rehear the case with a full panel of judges.