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CFED, Others Decry Possible Fate of the CFPB: What Will Trump Do?

December 8th, 2016 Comments off
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President Barack Obama announces the nomination of Richard Cordray as the first director of the CFPB on July 18, 2011. Credit: Wikipedia.

Since the Dodd-Frank Wall Street Reform Act was enacted six years ago, members of Congress have attacked the law, including the Consumer Financial Protection Bureau (CFPB), tirelessly” states a letter from CFED sent this morning (see attachment download, near the end of this post, below). “…the next Congress and Administration are likely to work closely together to attack Dodd-Frank and the CFPB. There is a real danger that moderate Democrats will even join Republicans to undermine these protections.”

As the days count down to President-elect Donald Trump’s inauguration, the saga of the Consumer Finance Protection Bureau (CFPB) continues to play out.

What the CFED letter fails to mention is to their supporters is that the CFPB provided funding to CFED.

Even when it was documented that the CFPB regulations were harmful to manufactured home owners and buyers, CFED continued to support the CFPB, and attacked all who would modify their regulations.

Even when video of Richard Cordray, the CFPB director himself saying there was very little predatory lending in manufactured housing, CFED and their allies continued to attack any who suggest any change at all to the regulations.

Now, The Great Battle over the CFPB is Looming

American Banker columnist John Heltman writes “The political independence of the Consumer Financial Protection Bureau may end not with a bang — after a protracted battle in Congress — but with a whimper, the victim of a bureaucratic rule that prevents the agency from appealing a pending court case to the Supreme Court.

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John Heltman. Credit: Twitter.

A recent ruling by the D.C. Circuit in the PHH case in October, which the Daily Business News covered here, determined that the single-director structure of the CFPB was incompatible with its status as an independent federal agency, and that director Richard Cordray would have to serve at the pleasure of the president to avoid violating the Constitution’s separation of powers.

This is unprecedented, and there are a lot of people who are confused and I think a lot of speculation about what’s going to happen,” said Thaya Brook Knight, associate director of financial regulation studies at the Cato Institute.

While the CFPB is appealing the decision, their ability to get the ruling overturned may actually hinge on whether or not the Justice Department will allow the case to move forward.

With Donald Trump taking office, and Senator Jeff Sessions being nominated for Attorney General, that could be tricky for fans of the CFPB.

But, there’s more.

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President-elect Donald Trump and Senator Jeff Sessions. Credit: Alabama Today.

A big challenge for the agency is Title X of the Dodd-Frank Act, which established the CFPB. The title gives the agency explicit authority to pursue its own litigation up to and including the Circuit Court level, but when it comes to the Supreme Court, the law says the CFPB must first file a written request to the U.S. Attorney General within a specified timeframe and that the “Attorney General concurs with such request or fails to take action within 60 days of the request.

In essence, Donald Trump and Jeff Sessions could “run out the clock” by taking no action, effectively blocking the CFPB’s appeal to the Supreme Court.

Heltman writes that this scenario leaves CFPB with relatively few options to prevail in their case with PHH.

The agency has requested an en banc (full court) rehearing of the matter before all sitting justices on the D.C Circuit. If either that request for rehearing is denied or is granted or the panel upholds the earlier ruling, the Justice Department could prevent the CFPB from appealing the case further.

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Richard Cordray. Credit: Wikicommons.

Even though President-elect Trump has not taken office, one former Treasury official believes that he would stop the CFPB in its tracks.

I assume that one of the first orders of business of a Trump Justice Department will be to end that appeal and effectively confess judgment, say ‘Yes, it was unconstitutional,’ and then fire [CFPB Director Richard] Cordray,” the former Treasury official said.

I’ve never seen a case where the eagle was on both sides of the case. That would actually sort of be proof that the ruling was right, wouldn’t it?

Another possible scenario is that President-elect Trump could remove Cordray from his role.

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Mark Calabria. Credit: Cato Institute.

According to AMI Newswire, Mark Calabria, the director of financial regulation studies at the Cato Institute in Washington, D.C., sees a strong case for Trump removing Cordray right after he assumes the presidency, based on the language in the Dodd-Frank Act and the director’s administrative record.

The first thing that can be done is replacing the director,” said Calabria.

Eventually a commission might take over, but it’s highly unlikely that would happen next year. Expect Congress to eventually limit the agency’s powers to take action against financial institutions for ‘abusive’ practices.

As noted above, the bureau also has its supporters and detractors.

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Dennis Kelleher. Credit: Better Markets.

In just a few years since it was created, it has returned more than $11 billion to more than 27 million Americans ripped off by financial firms,” said Dennis Kelleher, President of Better Markets a Wall Street watchdog. “After more than a decade of being victimized by financial predators, that is great news for America’s financial consumers.

The bureau is immune from traditional congressional oversight and is at odds with America’s democratic principles,” said Senator James Lankford (R-Okla.) last week in a report detailing wasteful spending by the federal government.

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Senator James Lankford. Credit: Twitter.

Almost everything the CFPB does is redundant to another federal agency. It should never have been created. The best use of funds would be to abolish the CFPB and spend the available dollars to reform and appropriately staff the other regulatory entities.

The manufactured housing industry’s professionals have strong feelings about the agency and its impact. The Daily Business News will continue to monitor the moves to reform or entirely repeal Dodd-Frank and the CFPB, and those who strive to defend it.  ##

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To see their letter, click the link below or the image above. CFED’s logo is their property, and is used here under fair use guidelines.

(CFED letter to supporters on the CFPB referenced above is available as a download, linked here.)

(Image credits are as shown above.)

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RC Williams, for Daily Business News, MHProNews.

Submitted by RC Williams to the Daily Business News for MHProNews.

Dodd-Frank Act is Harming the Economy, says Donald Trump

May 18th, 2016 Comments off

Donald_trump__newsmax_mediaIn an interview with Reuters, presidential candidate Donald Trump stated financial reforms implemented under President Obama, specifically the Dodd-Frank Act, and the ensuing Consumer Financial Protection Bureau (CFPB), are stifling the economy and he would ditch most all of their provisions.

Dodd-Frank has made it impossible for bankers to function,” he said. “It makes it very hard for bankers to loan money for people to create jobs, for people with businesses to create jobs. And that has to stop.”

In about two weeks he will release a plan for overhauling Dodd-Frank, which would be tantamount to dismantling of the legislation, prompting Democratic frontrunner Hillary Clinton to say that is a “reckless idea” which would “leave middle-class families out to dry.”

Dodd-Frank was passed in the aftermath of the Great Recession to make banks less vulnerable in times of crisis, but it also had the unintended consequence of making it more difficult for consumers to purchase manufactured homes, something the CFPB’s Director Richard Cordray could change with the stroke of a pen, as MHProNews understands.

Congressional Republicans have tried to ease the burden of the new regulations on small and medium-sized banks, and have called for the replacement of the sole CFPB director with a commission, as well as bringing the agency under Congressional oversight. Some have said the CFPB needs to be shelved altogether.

Banks and other lenders have spent six years and millions of dollars in attempting to comply with the law, according to newsmax.

John Hall, of the American Bankers Association (ABA), said, “Every law can be improved, and Dodd-Frank is no exception. Sometimes there are drafting errors. Sometimes a good idea in theory turns out to be unworkable after a closer look in the light of day.”

Representative Jeb Hensarling (R-TX), the chairman of the House Financial Services Committee, who has endorsed Mr. Trump, intends to release his own financial reform package in several weeks.

However, Dennis Kelleher of Better Markets said Trump’s plan would be “a slap in the face to the American people who have suffered so much from the 2008 crash.”

While Trump has not discussed specifics of his plan, he suggested that financial institutions should separate commercial banking activities from investment banking.

He did praise Fed Chair Janet Yellen for keeping interest rates low, but when her term expires he would replace her with a Republican.

For more information on an MH related topic, click here. ##

(Photo credit: newsmax–presidential candidate Donald Trump)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J. Silver to Daily Business News-MHProNews.