(Photo: NLJ)

The Consumer Fianancial Protection Bureau’s powers would be severely curtailed under changes to a broad Dodd-Frank overhaul bill being contemplated by House Financial Services Chairman Jeb Hensarling (R-Texas).

A Feb. 6 memo to the “Financial Services Leadership Team” obtained by the Credit Union Times, a ThinkAdvisor partner site, is a laundry list of changes Hensarling wants to make when he reintroduces his Financial CHOICE Act in the coming weeks. The memo dubs the new legislation as “CHOICE Act 2.0.”

Under the new plan, the CFPB would be restructured as a civil enforcement agency like the Federal Trade Commission. However, unlike the FTC, it would be governed by a single director who could be removed by the president at will.

Hensarling’s original bill called for a five-member CFPB commission.

Currently, the president may only remove the CFPB director for cause, although a federal appeals court has ruled that that structure is unconstitutional.

Hensarling’s memo makes it clear that the structure of the agency ultimately may be decided in court.

The new Hensarling plan would eliminate the CFPB’s power to act based on unfair, deceptive and abusive practices, and it would eliminate databases of consumer complaints.

The agency’s consumer education function also would be removed.

The memo also suggests requiring financial regulators to enter into a memo of understanding designating a lead banking investigator.

Hensarling’s plan faces an uphill battle. President Donald Trump has directed federal agencies to develop plans to loosen the regulatory regime faced by financial institutions.

Hensarling has said that many of Trump’s ideas are reflected in his legislation.

However, while he may have the votes to push it through the House, Senate Democrats have made it clear they will fight any efforts to weaken the CFPB.

And those Senate Democrats wasted no time in panning Hensarling’s CFPB plans.

“The Hensarling proposal would transform the bureau from an effective watchdog into a toy poodle – nice enough if that’s your taste, but not very useful,” said Senate Banking Ranking Democrat Sherrod Brown of Ohio. “They have taken a bad bill and made it even worse.”

That likely will mean that for any Dodd-Frank overhaul bill would need 60 votes to pass the Senate.

— Check out Dodd-Frank Rollback Gets Rolling With Financial Choice Act Reintroduction on ThinkAdvisor.