Ex-CFPB Officials Offer Plan to Curb Agency Volatility

Two former senior officials of the Consumer Financial Protection Bureau (CFPB) are proposing structural reforms to insulate the agency from the "regulatory whiplash" that occurs with changing presidential administrations. In a recent commentary, the former officials argue that constant shifts in enforcement priorities and the withdrawal of prior guidance create substantial uncertainty for financial institutions, potentially increasing costs for consumers and chilling innovation.

Their five key proposals aim to create a more stable regulatory environment. These include making key operational positions into career roles rather than political appointments, incentivizing formal rulemaking over policymaking-by-enforcement, strengthening congressional oversight, making Congress more prescriptive in the agency's duties, and preserving the CFPB's current funding structure. The officials are skeptical that replacing the single director with a multi-member commission would solve the volatility problem. While some reforms would require legislation, they note a new director could implement others unilaterally. A newly introduced House bill, the Consumer Financial Protection Accountability and Reform Act, touches on similar themes but proposes moving the CFPB into the congressional appropriations process, a move the former officials oppose.