Becker’s Spotlight: Consumers First Act

Becker’s Spotlight: Consumers First Act


Consumers First Act

On Wednesday, the House passed HR 1500, the Consumers First Act, by a 231-191 vote strictly along party lines. The bill is House Democrats most significant effort to date aimed at reversing or mitigating the impact of the substantial changes made by the Trump Administration to the Consumer Financial Protection Bureau (CFPB).

The CFPB was created by Congress under the Dodd-Frank Act (Public Law 111-203) following the 2008 financial crisis. CFPB’s responsibilities include oversight of home mortgages, payday loans, student loans, credit cards, debt collection, and other financial products designed for individual consumers. Unlike other federal agencies, funding for the independent CFPB does not come through Congressional appropriations but rather the Federal Reserve, a point of contention for many Republicans.

Since taking office, the Trump Administration, led by current Chief of Staff Mick Mulvaney, who served as acting director of the CFPB from November 2017 to December 2018, have made a number of changes to the function and organizational structure of the bureau. One such change in the function of the CFPB is enforcement actions. From 2015 to 2017, the bureau has averaged 44 enforcement actions annually. In 2018, under Mulvaney’s leadership, the CFPB only took elevenenforcement actions. The structural changes made under the Trump Administration include:

  • Moving the previously independent Office of Student and Young Consumers under the umbrella of the bureau’s Financial Education Office.
  • Removing the Office of Fair Lending and Equal Opportunity’s enforcement powers.
  • Removing all members of the Consumer Advisory Board and other CFPB panels and reducing the number of members who could serve on the boards.
  • Creating an Office of Cost Benefit Analysis that would allow the bureau’s director to end CFPB actions that impose costs of business without consideration of potential benefits to consumers.

The Consumers First Act would reverse these changes and make some changes of its own. Notable provisions of the bill include:

  • Requiring the CFPB director to ensure certain offices (like the Fair Lending & Equal Opportunity, Students & Young Consumers, Service Member Affairs, and others) are appropriately staffed to fulfil their duties and responsibility, including enforcement and supervision mandates.
  • Prevent the director from reorganizing or renaming such offices unless it is specifically authorized under the Dodd-Frank Act.
  • Restoring and codifying the stand-alone Office of Students & Young Consumers and requiring it be led by an assistant director and an ombudsman.
  • Require any office or department established to conduct cost-benefit analyses to consider potential benefits to consumers.
  • Require the CFPB’s consumer complain database to remain publicly accessible with the same functions as prior to when Mulvaney led the CFPB.
  • Require the director to ensure political appointees’ assigned duties are aligned similarly with those at other financial regulatory agencies.
  • Require the director to appoint at least 25 members to the Consumer Advisory Board, with at least 2/3 of those members representing consumers, including fair lending and civil rights experts.

While Democrats are enthusiastic about the potential opportunity to unwind what they view as the unfair gutting of a critical vanguard of consumer protection, the bill faces long odds of becoming law. The White House has already voiced its opposition to the bill, but even if HR 1500 does make its way to President Trump’s desk, it must secure passage through the Republican-controlled Senate where GOP Senators would be loath to so directly oppose the public stance of President Trump and the prior work of the current White House Chief of Staff.

Clarence Williams 
Steven J. Blattner