The Consumer Financial Protection Bureau has put the brakes on a planned restructuring of its supervision and enforcement unit after bureau staff raised objections to the changes.
The reorganization, announced in mid-October, would have essentially forced the CFPB’s enforcement division to get approval for new investigations and research matters from a new office in its Supervision, Enforcement and Fair Lending division.
But the plan was met with pushback within the bureau, according to a Monday email from Bryan Schneider, the associate director of the CFPB’s SEFL unit, obtained by Bloomberg Law.
“I continue to believe that SEFL should make changes to its organization, processes, and procedures to remain effective and efficient in protecting consumers in light of experience and new circumstances. However, the feedback I received raised important concerns that warrant more considered thought and analysis,” the email said.
“It has also demonstrated the need for further engagement around the best solutions for the issues you raised in the SEFL org review,” it said.
The CFPB declined to comment.
The proposed reorganization would create a new Office of SEFL Policy and Strategy to be led by CFPB Associate Director of Supervision Policy Peggy Twohig.
The new office would have the power to approve any new investigations and research matters proposed by the CFPB’s enforcement division. The CFPB’s enforcement division currently has the authority to open investigations without outside approval, a power unique among federal financial regulators.
The proposed reorganization drew condemnation from Democratic lawmakers, including Sen. Sherrod Brown (D-Ohio), the ranking member of the Senate Banking Committee. They said the changes would allow big banks and others to resolve problems through the confidential supervisory process, and avoid potential penalties and public scrutiny of their actions.
CFPB Director Kathleen Kraninger, a Trump appointee, signed off on the proposed reorganization after a more than seven-month review process, the CFPB said in October.
But the reorganization was expected to take months to complete, in part because it required negotiation with the CFPB’s National Treasury Employees Union bargaining unit.
President-Elect Joe Biden (D) is expected to replace Kraninger soon after taking office in January, meaning that the reorganization will likely be decided by the bureau’s next director.
“At this point, new CFPB leadership under President Biden should determine the future direction of the agency,” Brown said Monday in a statement.