Issue five of our weekly update from Washington, designed to keep NACBA members informed about any significant and relevant activity on the part of Congress, regulatory agencies and interest groups/think tanks.
ON THE HILL As noted in previous updates, Congress is on an extended leave and most members are focused on the upcoming election. However, there is an update on Wells Fargo. CEO John Stumpf, who faced outraged questioning from both sides of the aisle in committee hearings held in both the House and the Senate, has stepped down as chairman and chief executive officer. Lawmakers from both sides of the aisle responded to the news with pledges that they will continue pursuing the investigation into Wells Fargo following revelations last month that it opened more that 2 million accounts without customers’ authorization. Mr. Stumpf will be replaced by Tim Sloan, who was chief operating officer at Wells Fargo.
IN THE AGENCIES An appellate court overturned the Consumer Financial Protection Bureau’s (CFPB) $109 million fine against mortgage company PHH Corp. and called the agency “unconstitutionally structured.” The CFPB had fined PHH for referring customers to insurers who purchased reinsurance from a PHH subsidiary, a practice the agency likened to illegal kickbacks. PHH sued, saying the agency had overstepped its authority. “The director enjoys more unilateral authority than any other officer in any of the three branches of the U.S. government, other than the president,” wrote the three-judge panel of the U.S. Court of Appeals for the District of Columbia. “This is a case about executive power and individual liberty,” the court wrote. “Because of their massive power and the absence of presidential supervision and direction, independent agencies pose a significant threat to individual liberty and to the constitutional system of separation of powers and checks and balances.”
The court underscored what it called “the important but limited real-world implications” of the decision. The agency will continue to operate, but the president will now have the authority to remove its director at will. The court decision can be read here. The CFPB has not yet decided if it will appeal the decision. In the meantime, congressional opponents of the CFPB believe the ruling will boost their efforts to rein in the agency and undercut its independence.
FROM THE INTEREST GROUPS In a letter to Sen. Chuck Schumer (D-NY), the presumed Democratic Leader in the next Congress, several progressive groups have asked him to avoid letting the Banking Committee become too cozy with the financial industry in the next Congress. At issue are concerns that the committee’s contingent of moderate Democrats might grow.