Republican Sweep of Midterm Elections Could Signal Crucial CFPB Changes

The results of the midterm elections on Tuesday, which largely swayed in the GOP’s favor, are likely to have a significant impact on rules impacting banks and mortgage companies nationwide. 

The election netted a Republican advantage in the Senate of 52 Republicans to 45 Democrats, while House Republicans will gain at least nine seats in a House that previously comprised 234 Republicans and 201 Democrats. 

The parties have long sparred over important legislative issues impacting lenders such as Dodd-Frank and the CFPB, notably delaying the appointment of a Consumer Financial Protection Bureau director and leading to a recess appointment that resulted in Director Richard Cordray under President Obama. 


But with the political sphere shifting back toward the GOP, things could change further, the American Bankers Association (ABA) says in its analysis of the election’s impact, released Wednesday.

“While these rules are largely under the control of the prudential banking regulators and the [Consumer Financial Protection Bureau] CFPB, Congress can play a critical role in this process, in terms of both legislation and aggressive oversight of regulatory actions,” the ABA writes. “The U.S. Senate under current Democratic leadership has been reluctant to take on that role. We anticipate that the incoming leadership will be more active in their oversight responsibilities and will originate and consider some regulatory relief bills in the 114th Congress.”

Though control has changed in the Senate, it remains to be seen whether a sufficient majority, or 60 seats, will be gained. Without a sufficient majority, there’s more potential for continuing gridlock on major issues, including issues important to the banking industry, ABA says, adding that Democratic support will be key to moving forward to regulations that benefit the banking industry.

The ABA’s key issues for the 114th Congress include Dodd-Frank reform and CFPB structure changes, the association said.


Most legislation targeting Dodd-Frank change has been cursory in nature due to the political make-up in recent years. But now, with that make-up skewing republican, bigger, more sweeping legislation is likely to stand a better chance, ABA says. 

“In fact, the Senate Banking Committee has been unable to move any legislation—including eight non-controversial bills that passed the House with overwhelming bipartisan support—through the Senate,” ABA says. “Now, with a more like-minded Republican majority on the other side of the Capitol, expect Chairman Hensarling to be more aggressive in pushing for changes to Dodd-Frank and for the Senate to consider some of these measures. While wholesale changes are unlikely, there is a chance that some Dodd-Frank issues can pass both bodies with bipartisan support.”

The CFPB. 

The CFPB has long been a hot-button issue for both parties, with Republican lawmakers opposing the structure of the CFPB, and pushing for a CFPB leadership that would include a bipartisan committee. 

When CFPB Director Richard Cordray was finally confirmed last year, the Senate Banking Committee voted along party lines in a 12-10 vote for his confirmation. 

And while the extreme case of doing away with the CFPB is unlikely, ABA says, questions around its leadership are still very much issues at present. 

“Expect increased scrutiny in the Senate on the CFPB’s proposals and a continued push to change the structure of the CFPB from a single director to a five-member board and a push to subject the CFPB to the congressional appropriations process,” ABA says.

In addition, the ABA also highlights regulatory reform, data breach legislation, GSE reform and tax reform as key issues for the 114th Congress.

The Senate Banking Committee. 

As a result of the election, the Senate Banking Committee will now be headed by Sen. Richard Shelby (R-AL), who previously served as chairman from 2003-2007.

“With a two-year term (caucus rules only allow a chairman six years) and a narrow window of opportunity to advance legislation before the 2016 election cycle begins, it is uncertain how active Sen. Shelby will be in advancing legislation,” ABA says. “We expect him to be very active in his oversight of [Dodd-Frank] implementation, with particular focus on the CFPB.”

Shelby has in the past expressed concern over the regulations that banks face and has presented legislation that would require a cost-benefit analysis be done before federal regulators put rules in effect.

The committee will also have a new lead Democrat. Sen. Sherrod Brown (D-OH) and Sen. Jack Reed (D-RI) are in line to assume the position. ABA expects Brown to be selected for that position. 

Read the ABA’s full analysis of the 2014 elections here

Written by Cassandra Dowell

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  • Most political analysts do not believe that the final count in the Senate will be 52 to 45 but rather 54 to 46. With at least one Independent threatening to switch political loyalties for a committee chair or vice chair, it seems the final count will be much closer to 55 Republicans.

    As to the House, Republican domination as a percentage of Republican seats to total seats will ultimately not be much different than that percentage in the Senate. This is neither a super majority nor a veto proof majority; however, there are several votes in the last four years where significant percentages of Democrats crossed political lines to vote against the President. Thus there is room to conclude that if the Republicans get the right bills together, they could with great difficulty override some Presidential vetoes.

    There are few political pragmatists who believe that it is possible to rescind Obama cornerstone legislation but many of those same pragmatists believe that Republicans now have a chance to neuter the legislation through targeted funding measures, amendments to the laws which are included in bills the President wants, and finally the Republicans may have sufficient Democratic support to take the President in creating some veto proof legislation.

    There are few Republicans who like the Elizabeth Warren (Mann) Board mistitled the CFPB and do not want to see it terminated. Yet pragmatically the Republicans will fight to get the Directorship switched to a committee; however, this is not all they will pursue. What most Republicans hate the most about the CFPB is that there is no oversight required from Congress and there is no budget needing approval by Congress. So expect the CFPB to be attacked on three fronts: its headship, the lack of Congressional oversight, and the requirement that its budget go through Congressional approval.

    There are few other areas which command the attention of Republicans in respect to mortgage lending than the foregoing.

  • The Cynic points out many valid points and statistics.

    The CFPB has reigned over the highly controversial methods it has operated since its existence.
    The over regulations imposed on the banking and lending industry has crippled many of these small players in the market.

    Because of the way the Dodd-Frank bill was structured it virtually has given the CFPB autonomy like no other committee/ bureau has ever had.

    If the Republicans will take the stance that they should, many powers of the CFPB should be drastically reduced.

    In fact, I would not mind seeing the Dodd – Frank Bill (Financial Regulatory Reform Bill) repealed completely and have us start all over again. I feel this would be in the best interest of the American people and our great nation as a whole!

    John A. Smaldone

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