A new report by the Treasury Department recommends substantial changes to the structure and authority of the Consumer Financial Protection Bureau.
The report, released Tuesday, was issued in response to an executive order issued by President Donald Trump in February directing the Treasury to examine financial regulations. It is the culmination of four months of work by the department, which met with banks, regulators and consumer advocates in order to compile the report.
The Treasury’s report said, in effect, that the CFPB in its current form does more harm than good.
“The CFPB was created to pursue an important mission, but its unaccountable structure and unduly broad regulatory powers have led to regulatory abuses and excesses,” the report said. “The CFPB’s approach to enforcement and rulemaking has hindered consumer choice and access to credit, limited innovation, and imposed undue compliance burdens, particularly on small institutions.”
One of the report’s harshest criticisms of the agency was its leadership structure.
“The CFPB is led by a single Director who wields unilateral authority to enforce 18 enumerated federal consumer financial laws affecting major consumer decisions — from buying a home to paying for college,” the report said. “Despite this power, the unelected Director does not answer to the President or Congress in any meaningful sense.”
The Treasury said that the structure of the CFPB “should be reformed to ensure that it is accountable to elected officials and, ultimately, to the American people.”
The report recommended that the leadership structure of the CFPB be changed to make the director removable at will by the president, or to replace the director with a multi-member board, “which would create an internal check on the exercise of agency power.”
According to a report, the Treasury made other recommendations to limit the CFPB’s authority, including:
- Seeing that regulated entities are given abundant notice of the CFPB’s interpretation of regulation before making them face enforcement actions
- Procedural reforms to “curb excesses and abuses in investigations and enforcement actions
- Eliminating the CFPB’s “duplicative and unnecessary” supervisory authority
- Increasing safeguards for the agency’s Consumer Complaint Database