House Financial Services Committee Chairman Jeb Hensarling warned Consumer Financial Protection Bureau Director Richard Cordray on Wednesday that under the recent federal court ruling, the CFPB is no longer an independent agency and must now follow executive orders requiring agencies to ensure the benefits of their proposed regulations outweigh the costs.
“These executive orders issued by presidents Clinton and Obama are modest attempts to ensure that executive agencies are accountable to the American people and do not recklessly write regulations that damage our economy,” Hensarling, R-Texas, told Cordray in a Wednesday letter. “The court’s ruling makes clear that the Constitution requires the CFPB to operate as an executive agency, making the Bureau obligated to fully comply with these executive orders.”
The U.S. Court of Appeals for the District of Columbia Circuit ruled Oct. 11 that the CFPB is unconstitutionally structured but can continue to operate as an executive agency rather than an independent agency.
But Americans for Financial Reform argues that contrary to Hensarling’s pronouncement, CFPB is not subject to onerous executive orders regarding “Regulatory Planning and Review.” The executive orders specifically exclude any agency defined as an “independent regulatory agency” by 44 U.S.C. 3502(5), which lists the CFPB by name. PHH v. CFPB did nothing to change that statutory definition,” AFR says.
Hensarling told Cordray to provide his “written assurance” to the committee by Oct. 26 the he will abide by the executive orders before issuing or finalizing any rules, and cautioned Cordray on appealing the Court of Appeals decision.
Hensarling’s Financial CHOICE Act, includes provisions to increase transparency and accountability in the rulemaking process by putting in place cost-benefit analysis requirements for all financial regulators, including the CFPB.
In late September, Hensarling said that the CHOICE act, which also seeks to replace Dodd-Frank and kill DOL’s fiduciary rule, will likely move to the House floor for a vote after the election, and that presidential candidate Donald Trump supports the legislation.