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Members warn CFPB shutdown creates consumer‑protection gaps; Powell says agencies could reassume duties if Congress directs
Summary
Ranking members and several Democrats told the House committee that the Consumer Financial Protection Bureau’s interruption has created regulatory uncertainty; Powell said rules remain in force and that supervisory responsibilities could revert to the prudential regulators if Congress reallocated them by statute.
Democrats pressed the Fed over the recent interruption of the Consumer Financial Protection Bureau’s operations and the impact on consumer protections and supervision.
Representative Waters and other members told the committee the CFPB’s effective shutdown left consumers without a federal supervisory authority. Waters said the agency had returned roughly $21 billion to consumers since its inception and called for hearings with the CFPB acting director, members of Congress and the public. She asked Powell whether the Fed would resume consumer supervision in the absence of a functioning CFPB.
Powell’s response and agency limits
- Powell noted that the Consumer Financial Protection Bureau’s rulemaking and supervisory functions had been created by statute under Dodd‑Frank and that prior to Dodd‑Frank the Fed, the OCC and the FDIC conducted consumer examinations for the banks they supervised. He said that if Congress moved the supervisory responsibility back to the Fed, those functions could be performed, but doing so would require reallocation of staff and resources.
- On enforcement and regulatory continuity, Powell said the underlying regulations remain in force and that the Fed would follow the law and any statutory changes enacted by Congress.
Why it matters: A change in which agency performs consumer supervision would require new staffing and could create temporary regulatory gaps. Powell said the Fed currently lacks the staff that CFPB had absorbed and that returning functions would require building capacity.
Ending: Powell said the Fed would provide briefings and cooperate with Congress, but emphasized that statutory changes would be needed for the Fed to assume CFPB’s duties permanently.
