My colleague and TOTM blogger J.W. Verrett has a column in The Washington Times making the case for converting the CFPB from a one-person director to a five-member agency.
I, of course, agree with him as I have expressed in the past. In part this is based on my FTC experience. As I’ve remarked before, I don’t think you’d find very many FTC alumni who think that consumers would be better off if we spun off the Bureau of Consumer Protection from the FTC and gave the Director the powers that the CFPB head would be given.
As J.W. also notes, the idea of a five-member commission was the original Obama Administration proposal. This appears to have been at least implicit in Professor Warren’s original concept for the entity, which she said was modeled on the idea of the Consumer Product Safety Commission. I confess that I actually originally supported the idea of moving the proposed agency within the Federal Reserve rather than having it be a stand-alone agency, but that was on the assumption that it would actually be a bureau that would be accountable to the Federal Reserve Board (like the BCP is within the FTC). The idea of a single all-powerful unaccountable director appears to be one that was made up on the fly.
One last thing that J.W. notes is the anomaly that the CFPB director has a five-year term. Thus, if Cordray is confirmed, for instance, in two years we could have a Republican President with one set of policy preferences on these issues and a CFPB directors with completely different preferences, which is quite predictable given Cordray’s strong ideological views on consumer credit issues as evidenced by his short time as AG in Ohio. That seems like a real train wreck in the making. That also illustrates the reality that CFPB is really a policy-making entity, not a mere prudential-style banking regulator.