President Obama’s Consumer Financial Protection Bureau is a major target of Republicans this fall.
The House Financial Services Committee this week advanced two bills reforming the consumer agency, which opened in 2011. Republicans say that the measures would improve the accountability of the agency, by giving it a dedicated inspector general and replacing its single director with a five-member commission made up of members appointed by both parties.
Liberals, however, view those measures as efforts to clip the wings of the bureau, which was structured to be free of some of the restraints that they say slow down other agencies and expose them to the influence of lobbyists.
The bureau’s defenders at Americans for Financial Reform, a group that favors tighter regulation on finance, point to the $11 billion that the agency has recouped from financial firms for 25 million people as evidence that its structure is correct. “That record of accomplishment is precisely what makes this agency, as presently constituted, so objectionable to so many bankers, lenders and ideological opponents of the whole idea of regulation,” the group said.
Nevertheless, the industry has made changing the bureau a priority since Republicans gained the majority in the Senate this year.
The bills that advanced in the House will “provide better governance for this important agency,” said Georgette Sierra, vice president of Government Affairs for Lending and Leasing at the Financial Services Roundtable, an industry group. “Now that CFPB is a permanent part of our industry’s regulatory structure, we think these improvements will align the agency with its fellow regulatory agencies.”
The consumer bureau is one of the few parts of the financial regulatory landscape that would not be touched in the financial regulatory overhaul package authored by Senate Banking Committe Chairman Richard Shelby. That legislation has passed the committee and has been attached to an appropriations bill, and lobbyists are interested in passing elements of it with legislation to fund the government or raise the federal debt ceiling later in the year.
The added possibility of changes to the bureau, which is favored by Shelby and other Senate Republicans, drew alarms from the White House.
In a blog post on the White House website, National Economic Council Director Jeffrey Zients described the legislation as “efforts at the behest of Wall Street to undermine the people’s watchdog.”
The five-member commission, Zients argued, is “designed to tie the CFPB in knots.”
Republicans on the panel, however, were encouraged that they were joined in the vote for the five-member commission by two Democrats: David Scott of Georgia and Kyrsten Sinema of Arizona. Noting their votes, the bill’s author, Republican Randy Neugebauer of Texas, said in a statement that “by changing the leadership structure, we can ensure the bureau is more accountable, transparent and shielded from the whims of political change and partisan politics.”
