An army of high-ranking Biden and Obama administration alumni are ratcheting up pressure on Congress to preserve the CFPB as we know it, as an existential threat looms at the Supreme Court. MM readers are getting a first look at their new effort. In a letter to Senate Majority Leader Chuck Schumer, Senate Banking Chair Sherrod Brown and their GOP counterparts, 32 economic policy leaders from the last two Democratic administrations argue that Congress should reject legislation that would “undermine the CFPB” by altering its funding and structure. The former officials include Biden National Economic Council director Brian Deese and deputy director Bharat Ramamurti, Obama Treasury deputy secretaries Sarah Bloom Raskin and Neal Wolin, Obama OMB director Shaun Donovan, Obama Council of Economic Advisers chair Jason Furman and Biden antitrust adviser Tim Wu. They point to Republican-led bills that would bring the CFPB under the traditional appropriations process and replace its director with a five-member commission. The issue is on the verge of becoming a more pressing matter as the Supreme Court weighs the constitutionality of the CFPB receiving funding from the Federal Reserve. “These bills would undermine the independence of the CFPB and impair its ability to effectively operate on behalf of American consumers and responsible businesses,” the one-time Biden and Obama officials say. The push will give Democrats another reason to hold the line if the Supreme Court forces a major rethink of how the CFPB operates. “It’s to show that there is broad support among economic policymakers for preserving the way the CFPB has acted,” Ramamurti told MM. “You’ve got folks who worked in this administration, who worked in the Obama administration. You’ve got folks who probably scan as more progressive, some folks who scan as more moderate and with closer ties to the business community.” Republican lobbyists and bank lobbyists have long argued that the way Democrats designed the CFPB in the 2010 Dodd-Frank law has allowed it to escape accountability. Under current statute, appropriators can’t set its funding levels, and its leadership via a single director means it lacks the bipartisan push and pull of commissions like the SEC. In the past, some moderate Democrats have been open to the idea of revamping the bureau’s structure and installing a commission, a move that would likely slow down major regulatory actions and create a bigger opening for industry to influence the agency. In 2020, the Supreme Court made it easier for a president to remove the CFPB’s director. “There’s a good amount of accountability right now,” former assistant Treasury secretary Graham Steele, who signed the letter, told MM. “One of the issues is, accountability to whom? Congress always has legislative power to change things about the CFPB if the CFPB overreaches.” The Biden and Obama alumni are trying to build a sense of economic urgency. They tell lawmakers in the letter that they’re concerned about “potential systemic consequences” from attacks on the CFPB, including a scenario where legal challenges also imperil the funding structure of the Federal Reserve and other agencies. They see potential “chaos” in the mortgage market and other areas of consumer finance if the Supreme Court rules against the bureau. They argue that CFPB enforcement actions have put more than $20 billion “back in the pockets of everyday Americans.” Asked by MM how concerned he is about Congress’s support for the CFPB, Ramamurti said it depends on what the Supreme Court says. “There have been efforts pretty much since the day the CFPB was created to change it into a commission, to change its funding structure,” he said. “Even under Republican Congresses, those efforts failed. So I think there’s a strong base of support for preserving the way the CFPB is funded and the way it is led in large part because it’s been extraordinarily effective.” Happy Friday — Send tips to zwarmbrodt@politico.com.
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