Last month, Representative Steve Stivers (R-OH) re-introduced legislation that would establish an independent Inspector General at the Consumer Financial Protection Bureau (CFPB). The Bureau of Consumer Financial Protection-Inspector General Act of 2015 (H.R. 957) has garnered significant bipartisan support and is an important step in bolstering transparency and accountability at the CFPB. At the same time, this legislation ensures that the CFPB will continue to take appropriate action to protect consumers as an independent financial regulator. The Bipartisan Policy Center (BPC) strongly supports this bill, which echoes one of the major recommendations of BPC’s Consumer Financial Protection Task Force.
Currently, the CFPB shares an Inspector General with the Federal Reserve System. This Inspector General is appointed by the Chairman of the Board of Governors of the Federal Reserve System; it is not a presidentially appointed position. By contrast, most inspectors general are appointed by the president and subject to Senate confirmation.1 The Government Accountability Office (GAO) has stated that inspectors general have made a “significant difference in federal performance and accountability during the last quarter century.”2 Independence allows them to serve, without fear or favor, as vital guardians of government accountability and transparency.
While BPC has continually supported keeping financial regulators independent of the political process, including removing all financial regulators from the appropriations process, such independence must be accompanied by mechanisms to ensure accountability and transparency. As BPC’s Consumer Protection Task Force recommended in its 2013 report The Consumer Financial Protection Bureau: Measuring the Progress of a New Agency, “an independent Bureau should have a correspondingly independent inspector general with full investigative and reporting powers” separate from the current Inspector General of the Federal Reserve System.
By strengthening the accountability of the bureau, a truly independent and empowered Inspector General would also act to increase the CFPB’s legitimacy with the public and Congress. That, in turn, should help the relatively young agency improve its processes and organization in the future. As such, an independent Inspector General for the CFPB would represent a “win” for transparency, for the bureau, and ultimately for the consumers that the agency was established to protect. BPC encourages Congress to quickly enact H.R. 957.
1 Fifty-seven federal departments or agencies have a statutorily-mandated inspector general as defined under the Inspector General Act of 1978. Inspectors general typically have the right to receive full access to all records available to an agency; to conduct audits, investigations, inspections, and issue reports; to issue subpoenas for non-federal records; to receive employee and other complaints, which can be referred to the Justice Department; and to have a guaranteed funding source that can be used to hire staff and equipment.
2 U.S. General Accounting Office, “Inspectors General: Enhancing Federal Accountability.” Statement of David M. Walker, Comptroller General of the United States Before the Subcommittee on Government Efficiency and Financial Management, Committee on Government Reform, House of Representatives, October 8, 2003. Available at: http://www.gao.gov/assets/120/110419.pdf.