CFPB Might Be Vulnerable Now - Is There Enough Crow to Go Around?

by Robert Smith

Originally Published - Nov 09,2016

This humble little post comes in the sea of news stories and commentaries about the stunning victory of our new President-Elect, Donald J. Trump. And, like so many of those stories and commentaries today, this one is a look back and recognition that what we thought was certain is most certainly not. One of the big topics has been what Trump and the Republican controlled Congress will do with the Affordable Care Act. However, while that is hugely significant in its own right, let us not overlook what may happen to Dodd-Frank and the CFPB.

Back in April 22, 2016, I wrote a response to what was, quite honestly, casual commentary from some of my peers and the lending industry regarding the CFPB. There were a handful of individuals who felt the agency was too onerous, and Congress was at least going to have to put a leash on it, if not render it mostly ineffective or dismantle it entirely.

In my own circles at least, only a few people seemed to be saying that. Most of us saw the CFPB as something that was here to stay. Even if it were somehow reformed, its intentions and its mission would be largely left intact, and it would be left with significant power to act on them. In June, the House Financial Services Committee released the text of a bill sponsored by Rep. Jeb Hensarling (R-TX5) to roll back Dodd-Frank and make massive changes to the nature and powers of the CFPB. It was introduced on September 9th as H.R. 5983.

I see how that move could be dismissed at the time. Frankly, I dismissed it myself. It seemed to be little more than political gesturing, a show of resistance and an effort, however effective or ineffective, to at least force the issue to be revisited. Whatever it was, the bill itself was dead on arrival. Even if it made its way through the Republican controlled Congress before January, there was no way President Obama would sign it into law. Hillary Clinton seemed destined for the Oval Office, and it was highly improbable she would approve it. That assumed it would even reach the President's desk after January, when it looked as though Democrats would likely take control of the Senate.

Today, we know that Donald Trump, not Hillary Clinton, will be the next President of the United States. We also know that Republicans will retain control of both houses in Congress. Suddenly, this once toothless bill has some bite to it. The economy is one of the dominating themes from Trump’s message, and the lending and credit industries are inevitably going to be a large part of that. The message from Republicans this morning sounds far more united and emboldened than it did even a month ago. I predicted about six and a half months ago that the CFPB was likely here to stay. I think my Thanksgiving bird this year will be crow.