With the new administration in Washington promising less regulation and the repeal of existing regulation, financial service providers are in a wait- and- see mode. This inactivity is caused by a concern that any changes in product or policy made now, could be overturned in an instant (or a Tweet?). Attention is being turned to any news that might suggest directional changes to the leadership or structure of the CFPB. In an opinion piece in the American Banker, Ken Cuccinelli, general counsel of the FreedomWorks Regulatory Action Center and a former attorney general of Virginia summed up what many in the financial services industry feel about the CFPB:
The CFPB has been agency out of control — drunk on power. Even with the limitations imposed by the D.C. Circuit in its ruling, far too much power remains concentrated in the hands of the CFPB director. Furthermore, the agency remains beyond the power of Congress to control its activities through the power of the purse.
If the CFPB were to be somehow eliminated, would a less or better regulated environment for banking emerge? As the article correctly points out, there are many other, established regulatory bodies which collectively can regulate the same industries that the CFPB considers its purview. In the past, these agencies have chosen not to be as aggressive:
Let’s return the CFPB’s regulatory responsibilities to the specific departments and agencies covering the relevant industries, and of course, to the states that have been responsible for basic consumer protection for a long, long time. I should know. As a former attorney general of Virginia, I took my responsibility to protect consumers seriously.
The jury is still out. Gridlock remains for now.
Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group
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