Consumer Financial Protection Bureau at Risk in 2012 Election

Should presidential hopeful Mitt Romney win the 2012 election, the Consumer Financial Protection Bureau might face some tough challenges. In fact, it could undergo a "drastic makeover," as Jenna Greene writes, who reports for the National Law Journal.

The CFPB is the youngest federal agency, formed just over a year ago in July 2011. The agency came into being under the Dodd-Frank Wall Street Reform and Consumer Protection Act, a law passed in the wake of the Great Recession.

Part of the CFPB's mission is to supervise banks, credit unions and other firms (such as debt collection agencies), like a "neighborhood cop on the beat," according to its website. And, like a cop, the agency seeks to enforce the Fair Debt Collection Practices Act, among other federal consumer protection laws, which could be a source of concern for a Republican president.

Here's a look at what might happen to the CFPB if Barack Obama is reelected or is beaten by his competitor.

The CFPB under President Mitt Romney

The Republicans have been quite vocal in opposition to the CFPB. In fact, Barack Obama apparently felt painted into a corner when he issued a sneaky recess appointment in Jan. 2011 to put Richard Cordray in place as the agency's director.

Up until then, the CFPB had no director, because the Republicans opposed any appointment. This left the agency largely ineffective.

With Director Cordray in place, the CFPB began to carry out its mission. Most recently, it announced plans to supervise the nation's biggest debt collection companies (firms that bring in $10 million or more in annual revenue from collection activity). The supervision is meant to help curb abusive and misleading debt collection behavior perpetrated against consumers.

Under a Romney administration (and assuming for the moment a Republican majority in the Senate), here's what could happen to the CFPB:

  • Unlikely: The agency is dismantled entirely.
  • Possible: The powerful director is replaced with a five-member commission.
  • Likely: A new Republican director is installed, who eases up on aggressive enforcement of consumer protection laws.

While a Romney-appointed director would likely change the aggressive stance of the CFPB, it is still an independent agency, and even under Romney will continue its mission to supervise businesses and enforce consumer protection law against shady mortgages and abusive debt collection.

The CFPB under President Barack Obama

If Obama is reelected, the CFPB will continue to carry out its supervisory and enforcement function. In fact, it will probably get more aggressive. If the latest news about supervising large debt collection firms is any indication, the CFPB is taking its role as the "neighborhood cop on the beat" quite seriously.

And, as Greene reports, a second- and final-term President Obama will no longer be concerned about reelection strategy. "I think we'll see the CFPB become even more activist," says one attorney with knowledge of the industry.

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As far as an "activist" CFPB is concerned, that should suit most consumer rights lawyers just fine. In just the area of debt collection, consumers lodged hundreds of thousands of complaints in 2011 alone. Consumer debt is one area where people truly need help fighting against abusive debt collectors - whether it's through filing a lawsuit under the Fair Debt Collection Practices Act, or stopping collection activity altogether by filing for bankruptcy.


Youngest agency has a lot on the line

U.S. Consumer Bureau to Supervise Biggest Debt Collectors