On March 13th, President Trump issued an executive order that could affect
the future of Consumer Financial Protection Bureau (CFPB). The agency
was initially authorized by Congress under the Dodd–Frank Wall Street
Reform and Consumer Protection Act to oversee consumer financial laws
for banks, credit unions, securities firms, mortgage servicers, and other
financial institutions in the U.S.
The executive order calls for a reorganization of the executive branch
to rework or eliminate portions of particular agencies and their programs.
Section 1. Purpose. This order is intended to improve the efficiency, effectiveness,
and accountability of the executive branch by directing the Director of
the Office of Management and Budget (Director) to propose a plan to reorganize
governmental functions and eliminate unnecessary agencies (as defined
in section 551(1) of title 5, United States Code), components of agencies,
and agency programs.
This presidential order, which must be carried out within 180 days of its
signing, directs heads of agencies to submit proposed plans to reorganize
with an eye toward improving “efficiency, effectiveness, and accountability
of that agency.”
In addition to the government mandate, the public will also be given an
opportunity to offer suggestions for agency improvement within the executive branch.
What this appears to mean for consumers and the CFPB is that the bureau
may find itself swept up in the President’s desire to reform the
federal government. This EO includes recommendations to President Trump
from the Director of the OMB to eliminate any unnecessary agencies as
well as recommendations on downsizing individual agency programs.
Repealing Dodd-Frank or, at least eliminating the CFPB and its regulatory
burdens, has long been a goal of Republicans in Congress, and the Trump
administration has not been shy about their disdain for the regulatory agency.
So, is this the death knell for the CFPB? Not quite.
The CFPB was established and operates under the Dodd-Frank Act and, therefore,
any attempt to make changes to either eliminate or restructure it must
require Congressional amendment of the Dodd-Frank Act itself.
This new order merely expands the effect of other proposed bills regarding
the overhaul of the CFPB and adds to the uncertainty of the agency’s future.
In a recent court decision, the CFPB’s organizational structure was
ruled unconstitutional, putting the bureau’s head, Director Cordray,
firmly in Republican crosshairs. Pending an appeal bureau, President Trump
now has the right to remove Cordray and appoint another director with
goals similar to his own. When this will happen is not yet known, but
given the current administration’s propensity for change, you can
count on an agency shakeup in the near future.
For more information contact
Jaspreet Kaur directly.