Last week, the House Financial Services Committee passed H.R. 1500, the Consumers First Act, by a 34-26 vote. The legislation was initially introduced by Rep. Maxine Waters (D-CA) back in September 2018 as H.R. 6972, and then re-introduced in the new congress as H.R. 1500.

According to the Committee’s press release, the Consumers First Act aims “to block the Trump Administration’s anti-consumer agenda and reverse their efforts, led by Mick Mulvaney, director of the Office of Management and Budget, to dismantle the Consumer Financial Protection Bureau.”

In March 2019, the Consumers First Act was front-and-center at the Consumer Financial Protection Bureau’s (CFPB) annual report to congress, where Director Kathy Kraninger testified before both the House Financial Services Committee and the Senate Banking Committee. This set of hearings was the first for Director Kraninger since she took over leadership of the CFPB in December 2018. Many questions at these two hearings revolved around the actions taken by Director Kraninger’s predecessor, Former Acting Director Mick Mulvaney, which the Consumers First Act attempts to undo.

The bill seeks to put a cap on the number of political appointees at the Bureau, to bring back enforcement of areas like payday lending, and to return the name of the Bureau to the Consumer Financial Protection Bureau or CFPB -- the latter already being done by Kraninger as one of her first acts as Director.

insideARM Perspective

During the two congressional hearings last month, many of the issues raised by committee members related to the disbanding of the Consumer Advisory Board, internal structural changes within the Bureau (e.g., the student loan and fair lending teams), and the Bureau's decision that it did not have supervisory authority over the Military Lending Act (MLA). These are the things that the Consumers First Act aims to "fix."

The irony here is that the first two items referenced fell well within the Director's extremely broad discretion -- a discretion that was mostly unquestioned by Congress when Former Director Richard Cordray was in power. Regarding MLA supervision, Director Kraninger stated that she supports and urges congress to pass legislation that would clarify this authority.

When the pendelum swings too far in one direction, it is foreseeable that actions will be taken to bring it back to center. The lawsuits questioning the constitutionality of the Bureau's structure and funding mechanism were a response to what was deemed as overly broad discretion placed in Cordray's hands. After the pendelum swung the other way when Mulvaney took over the Acting Director role, the Consumers First Act was the response. And so it will swing back and forth until some happy medium is reach -- if ever.

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