Republicans Propose Dodd-Frank, CFPB Overhaul

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House Financial Services Committee Chair Jeb Hensarling (R-Texas) unveiled the outline of a massive new Republican plan this week to overhaul or strip away nearly every aspect of the Dodd-Frank financial reform. The new plan, called the Financial CHOICE Act, would result in big changes to the Dodd-Frank, including a repeal of the Volcker Rule, the creation of new capital and liquidity standards for banks and, most relevant to the collections industry, a thorough strip-down and rebuild of the CFPB.

“Simply put, Dodd-Frank has failed,” Mr. Hensarling said, as quoted by several national newspapers. “It’s time for a new legislative paradigm in banking and capital markets.”

The proposed plan would significantly curb the Bureau’s independence by introducing checks and balances more common in other government regulatory bodies. Under the plan, the CFPB would not only get a new name – the Consumer Financial Opportunity Commission (CFOC) – but it would also get a new governance structure. The directorship model (and, presumably, the Bureau’s sitting Director) would be out. In its place the Bureau would have a five member, bipartisan commission that would have to operate under congressional oversight. The revamped Bureau would also have to contend with Inspector General oversight and would have to request permission from Congress before collecting information on the finances of consumers.

The new plan would also repeal the Bureau’s ability to ban bank products or services it deems “abusive,” and eliminate its indirect auto lending guidance.

Aspects of the plan have already drawn support from industry advocacy groups. The ACA has expressed support for the Republican plan to replacing the CFPB director with a bi-partisan commission.

The insideARM Perspective

The Act has almost no chance of passing any time soon, certainly not with a Democrat in the Whitehouse. In fact, President Obama wasted no time in criticizing the plan.

“Have we really forgotten what just happened eight years ago? It hasn’t been that long ago,” Mr. Obama said, as quoted in the New York Times. “And because of their reckless behavior, you got hurt. And the notion that you would vote for anybody who would now allow them to go back to doing the same stuff that almost broke our economy’s back makes no sense.”

What Hensarling’s plan aspires to do, however, is put financial regulatory reform , the merits of Dodd-Frank and even an assessment of CFPB powers squarely in the middle of the presidential debate this fall. For industry parties interested in CFPB reform, the best bet is a long game, and this isn’t a bad start.

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  • avatar Linda Almonte says:

    Hmmm no opinions? This will play out here in San Antonio and both sides should be prepared and talking to an audience that all works in the key roles and experienced many of the topics that will need to be covered..

    There may be some influencing factors to that which most people don’t know. First of all as far as I know former cfpb employees and regulatory whistle blowers were part of this. No more this is an evil Republican thing this is about the employees and customers and the values the programs bill bring and follow though which are best for the country in the way the people are moving. And probably the toughest group to meet with there are hundreds of thousands of bankers and corporate employees and expect intelligent debate not a speech. Hilary already got chased out of San Antonio embarrassed and then Huston too might now want to bring her. That congressional committee with this is half republican and democrat and it isn’t only political like some are saying. But most are predicting no choice but a showdown in Texas and that should be interesting. And there needs to be a few from there. Promises wont cut it went all in on that four years ago. With Sn Antonio having over 600 operations and call centers the largest 16k employees in one site. Most are banking, financial services and insurance. And these are the people that lived through the never ending case and auditors and AG’s media and a lot retaliated against for answering honestly to regulators and other bogus reasons.The way the CFPB handled was disappointing on a lot of levels first showing accomplishments of the employees sticking together and not going to follow directions like that and think twice about doing it again they do have a resources to go to. So showing up and saying they handled it wrong and didn’t get the feedback from the employees prior to making the changes and will resolve now. Show us a plan for Dodd Frank and the CFPB that provides value to employees and consumers. And not just a huge budget and outside of items actually done by employees most don’t see as any priority. In addition to the 600 mega operations and call centers, 7000 companies moved to Texas including a lot of large Global one and put the global headquarters here. Those are mostly corporate and finance jobs. So this is ground zero for Dodd Frank and the CFPB to give a pitch that speaks to this audience and is honest, apologize for some previous choices and corrects and are you ready and able to do the jobs we want you for. With this we son’t want to hear politics we want to hear you talk about you jobs that we elected you too and why should we trust for another for what earned that trust, No race baiting thi is about the most diverse city in the US and we are all mutts. The faux feminism and even mention of the womens card is an instant drop in opinion, this is business and a shot to present your case no politics, social warrior rants, bout fifty percent of people around you are armed men and women deal with it. We don’t want any free stuff, we want to see an understanding in the jobs and roles and should be consulted when getting feedback or answers on areas in consumer banking and be on the informed list and better at the table with a voice. And be prepared to be called out on the cwa union website you are supporting to unionize call centers. People start following directions to create disturbances in these 600 call centers . That isn’t going to work out here lie other places and would lose the support of the industry instantly and who control a lot of lobby dollar which are on hold I am told by several people. Be prepared for some anger about previous choices and correcting them prior to promising new. And take the time to visit some major centers not what you describe.

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