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36 | Th e M Rep o RT O r i g i nat i O n S e r v i c i n g a na ly t i c S S e c O n da r y m a r k e t SERVICING The laTesT republicans to Push for cFPB Overhaul With new majority power, Gop sets its sights on reforming Dodd-Frank statutes. t he U.S. midterm elections concluded just last month, and already Democrats are circling the wagons to protect what will certainly be a top priority on the Republicans' list of changes—the Consumer Financial Protection Bureau (CFPB). Republicans have hinted, some not-so-subtly, that the bureau needs reforming, and they intend to do just that now that they have a majority in both the House and the Senate. The CFPB was created in 2011 from the controversial Dodd- Frank Wall Street Reform and Consumer Protection Act, which was passed by a Democratically controlled Congress in 2010. It is widely speculated that the Dodd- Frank Act, and more specifi- cally the CFPB, along with the Affordable Care Act will be two issues incoming Senate Majority Leader Mitch McConnell (R-Kentucky) and likely Senate Banking Committee Chair Richard Shelby (R-Alabama) will go after first when they take their new seats in January. The bureau's stated mission is to "make markets for consumer financial products and services work for Americans—whether they are applying for a mortgage, choosing a credit card, or using any number of other consumer financial products." In carrying out this mission, the CFPB has penalized the financial indus- try billions of dollars, including levying a $37.5 million fine on Michigan-based Flagstar Bank in September and a $2 billion penalty against mortgage servicer Ocwen in late 2013. Penalties like these and CFPB Director Richard Cordray's declaration that the bureau will "vigorously enforce" new mortgage servicing rules have led many Republicans to believe the bureau embodies overreach- ing bureaucracy—too powerful because it is not accountable to Congress. In an editorial in the Wall Street Journal in July, Sen. Shelby la- mented what he believed to be a lack of accountability on the part of the CFPB, openly questioning why a single director heads the bureau when the Federal Reserve, the FDIC, and the Securities and Exchange Commission are all led by boards. Congressman Jeb Hensarling (R-Texas), current chair of the House Financial Services Committee, expressed his disdain for the CFPB in an interview with the Wall Street Journal shortly before the recent elections. Hensarling called the CFPB an "unaccountable federal leviathan" and questioned why the bureau is not accountable to Congress or any government agency despite being funded by the Federal Reserve. Not only that, Hensarling said, only the president can remove the bu- reau's director, and even the U.S. Supreme Court has to defer to the CFPB's decisions. Republicans know that making significant changes to the CFPB will be a difficult measure. The politics of restructuring an author- ity with the words "consumer" and "protection" in the title are tough if not handled correctly. Following the midterm elec- tions, Barney Frank, one of the chief architects of the Dodd- Frank Act, told MSNBC's Chris Matthews that he sincerely hopes Republicans will "come after" the CFPB because doing so will cer- tainly mean a backlash from the American people. The campaign commercials depicting big bank CEOs lighting their cigars with $100 bills will write themselves. The reforms proposed are aimed at curtailing the bu- reau's power by replacing the bureau's single director with a five-member board and giving Congress control of the bureau's funding. For McConnell, Shelby, Hensarling, and the rest of the Republican caucus, the key will be to make the case that the ad- ministration has over-corrected.