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CFPB structure invites abuse: Opposing view

posted on 2016-10-18

The Consumer Financial Protection Bureau is headed by a director who single-handedly has jurisdiction over 15,000 institutions and whose decisions impact millions of consumers every day.

This person is judge and jury when it comes to imposing fines, rulemaking activity and supervisory opinions. The structure makes the CFPB director the most powerful person outside of the president of the United States.

Recently, a federal court decided a sitting president could immediately remove a CFPB director. Not only does this make the CFPB akin to an executive agency — it was intended to be an independent bureau like the Federal Trade Commission — but the direction of the bureau is at risk of being shifted by political winds every four years.

If the CFPB is to deliver stable, effective oversight on behalf of taxpayers, it must be transparent, fair and impartial when issuing judgment, not driven by the views of any one person. That’s why even experts outside the banking industry are calling for a bipartisan, five-member commission. The goal? To find balance, protect the bureau from political influence, and help mitigate risk to individual liberty.

A commission would not have prevented the Wells Fargo consent order, nor would it take away any of the bureau’s powers. It would bring about a more balanced, transparent approach. Before she was elected, Sen. Elizabeth Warren, D-Mass., originally called for the creation of a commission.

Like anything rational, there must be middle ground.

It helps no one, not banks and certainly not consumers, if there are no checks and balances in our governing bodies. While the reasoning for the bureau’s creation makes sense, the execution of its governance structure should be a concern to all. As it stands, the potential for abuse of power is not only possible, it is inevitable.

Our government can make the CFPB stand the test of time by way of a five-member commission. All it needs is the will. If there is such a thing as perfect timing, now is it.

Richard Hunt is president and CEO of the Consumer Bankers Association, which represents the retail banking industry.