Officials with the Consumer Financial Protection Bureau face the possibility of being subject to a newly created inspector general, thanks to a pair of bills recently introduced in both chambers of Congress.
The bureau was created by Congress in the wake of the Great Recession of 2008 and began operating in 2011 within the Federal Reserve and subject to its inspector general. The new inspector general would focus solely on the bureau.
Reps. Steve Stivers, R-Ohio, and Tim Walz, D-Minn., re-introduced the bipartisan bill, which the two had unsuccessfully put forward in December 2013, to the House Financial Services Committee Feb. 12.
The effort to create an independent watchdog at the bureau gained bipartisan support last year when seven Democrats joined Republicans on the committee in a 39-20 vote for the measure. Committee chairman Rep. Jeb Hensarling will again support the measure, according to a spokesman.
The bureau “is arguably the single most powerful and least accountable federal agency in the history of America,” Hensarling said during a hearing on the agency’s semi-annual report in September 2013. “Combined with this breathtaking lack of accountability is a grant of power … to the [bureau] director that is unilateral, unbridled and unparalleled.”
Hensarling said the agency is “uniquely unaccountable” to Congress, the president and the federal courts, pointing to the fact that the White House can only remove its director for cause.
“Unlike many other agencies, there is thus no check to ensure the CFPB director is spending the people’s money effectively to promote consumer protection, much less effectively in a time of runaway debt and deficits,” he continued. “Not even the agency from which the CFPB obtains its funding, the Federal Reserve, has oversight over the CFPB director’s spending.”
Stivers’ staff is working to secure a hearing and markup session before the financial service panel “as soon as possible,” but nothing is on the books yet, Maria Dill, the congressman’s spokeswoman, told the Washington Examiner.
Sen. Rob Portman, R-Ohio, re-introduced a companion bill in the upper chamber.
Funding for the bureau comes from the Federal Reserve’s budget, so Congress has little ability to exert its authority through the appropriations process. The consumer agency presently shares an inspector general with the Fed, whose chairman appointed the watchdog without input from Capitol Hill.
Under the proposed measure, the president would nominate an inspector general for the bureau and the Senate would debate and confirm his choice.
The bill would amend the Inspector General Act of 1978, which established agency watchdogs long before the bureau even existed, to include an inspector general position at the bureau like those in 72 other federal departments and independent agencies.
“This legislation will allow for increased oversight of an agency that has been given broad authority,” Stivers said in a Feb. 12 statement.
Created under the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, the bureau has regulatory authority over a wide swath of financial institutions, including banks, credit unions and loan associations.
But the agency has faced a litany of criticisms in the years since it assumed responsibility for protecting financial sector consumers, as reported by the Examiner.
Bureau officials have repeatedly resisted outside attempts to investigate their activities, and even refused to adhere to the same deposition rules that compel other government offices to allow their employees to testify.
The bureau was the subject of three separate probes last year after being hit with a barrage of allegations that officials discriminated against women and minorities in the workplace, among other misconduct.
Both the Fed’s inspector general and the Government Accountability Office launched investigations into the agency’s hiring and promotion practices, which ultimately prompted a number of whistleblowers to come forward with testimony revealing a culture of retaliation and even racism throughout the ranks of the bureau.
For example, one whistleblower told Congress an agency unit was nicknamed “the Plantation” because of its high number of black staffers.
Those employees were “never considered or groomed for management despite their competitive qualifications.”
Hensarling’s committee held a series of hearings in the course of its own probe after the discrimination charges surfaced.
The agency drew more criticism when extravagant plans to renovate its Washington headquarters were exposed.
Government Accountability Office auditors also uncovered rampant spending problems in a probe that concluded many of the bureau’s stated accounts could be inaccurate.
The move to install an inspector general at another government agency comes weeks after a different House committee — Oversight and Government Reform — probed obstacles to watchdog independence that allegedly pervade the executive branch.
Rep. Jason Chaffetz, R-Utah, chairman of the Oversight Committee, has been a vocal critic of inspector general independence, but declined to comment on the protection bureau bill.
