The Consumer Financial Protection Bureau is now bound by the same rules that govern other executive orders instead of enjoying the freedom that comes with being an independent agency. House Financial Services Committee Chairman Jeb Hensarling recently issued a warning to Richard Cordray, the director of the CFPB, that his agency is no longer an independent entity and must now adhere to the rules that apply to other types of executive orders. These rules include taking measures to ensure that the measures taken by the agency are greater than the costs that are incurred.
Hensarling told Cordray in a letter that, “These executive orders issued by presidents Clinton and Obama are modest attempts to ensure that executive agencies are accountable to the American people and do not recklessly write regulations that damage our economy. The court’s ruling makes clear that the Constitution requires the CFPB to operate as an executive agency, making the Bureau obligated to fully comply with these executive orders.” (For more, see: How the Consumer Financial Protection Bureau Works.)
This warning comes in the wake of a recent court ruling. The U.S. Court of Appeals for the District of Columbia Circuit ruled in October that the CFPB is not an independent agency, but falls under the jurisdiction of executive orders. However, the Americans for Financial Reform group has countered that the CFPB is in fact not subject to the rules that pertain to executive orders because they specifically exclude any entity that is considered to be an independent agency, and these provisions clearly list the CFPB as one of them.
Nevertheless, Hensarling told the CFPB that it will need to provide “written assurance” by October 26 that the group will abide by the rules for executive orders. Time will tell how this dispute pans out and what rules that the CFPB will end up operating by. (For more, see: CFPB Targets Discriminatory Lending Practices.)