A recent US Supreme Court ruling on the Consumer Financial Protection Bureau (CFPB) was the subject of a critical editorial in the Wall Street Journal (WSJ) (The Court’s Missed Opportunity on Consumer Financial Protection, June 29, 2020).
The ruling struck down the agency’s independent director for-cause removal provision from the Dodd-Frank Act by a 5-4 majority. This means that the President now has broader scope to remove a director from his or her position. While we believe the ruling is undoubtedly a step in the right direction, we note that the WSJ, characterizes the decision as:
“ …a narrow victory for the separation of powers, [that] otherwise ratifies [Senator Warren’s] constitutional monstrosity.”
In the past, NILA has pointed out the challenges stemming from the way the CFPB was established, expressing concerns about an “activist mindset” under its original leadership. We lay this out in our three-part series on this website, The CFPB and Installment Lending.
Despite these concerns, NILA members have always tried to work with the CFPB, recognizing that, as the bureau has sought to crack down on less safe and affordable credit sources, our traditional installment loans have become more important to American borrowers than ever.
We understand that the change of leadership and decisions like this one from the Supreme Court are all part of the evolution of the bureau; a process which we hope will optimize it for its role protecting consumers from bad actors in the credit business, while ensuring that safe and affordable credit is widely available.