The U.S. Consumer Financial Protection Bureau, already in legal limbo after an October court decision, could find its powers scaled back by President-elect Donald Trump and a Republican-led Congress, according to members of both political parties, lobbyists and lawyers.
That may mean the end of many of the agency’s rule-making actions that have enraged critics, including a proposal to stop companies from blocking customers from class action lawsuits and another one to limit payday lending.
Creation of the CFPB was authorized in the 2010 Dodd-Frank Wall Street reform law enacted in the aftermath of the 2007-09 financial crisis. The agency began operations in 2011.
An agency to protect consumers’ finances was the idea of liberal Democratic Senator Elizabeth Warren of Massachusetts. Its creation is considered one of Democratic President Barack Obama’s top domestic policy achievements.
A Trump administration is expected to be hostile to the agency as it is currently formulated.
“The election spells very bad news for the CFPB,” said Alan Kaplinsky, head of the Consumer Financial Services Group at law firm Ballard Spahr.
Many Republicans opposed the agency’s creation. They now say they dislike its structure and believe it oversteps its authority in enforcement.
“It’s a very fragile thing. It was birthed in controversy and is under constant attack,” said consumer attorney Deepak Gupta, who worked at the CFPB in its early days. “It may not survive the way we know it through this administration.”
A single director leads both rule-making and enforcement, and can be dismissed only for cause. Furthermore, the agency is funded by the U.S. Federal Reserve system, which means it is not dependent on the typical congressional appropriations process.