S02E10: Stopping CFPB

Much of the authority of the Consumer Financial Protection Bureau (CFPB) is schedule to go into effect in July, which means that between now and then, attempts by House Republicans to limit that authority are going to intensify. This week's episode of 90 Second Summaries examines some of those attempts.

Though these bills are unlikely to see real action on their own, look for a measure of this sort to be included as a rider on some must-pass piece of legislation.

90 Second Summaries: Season 2, Episode 10
Proposals to Limit Authority of the Consumer Financial Protection Bureau

Click here to download this summary (pdf)

Status: Assigned to House Financial Services Subcommittee on Financial Institutions and Consumer Credit. Hearing held on the issue 4/6/11. No further action scheduled as of 4/8/11.

Senate Companion: S.737, sponsored by Jerry Moran. Companion to H.R. 1121. Introduced 4/6/11 and assigned to Banking Committee. Republicans will likely attempt to attach it as a rider to appropriations or other must-pass legislation.

Purpose: One of the most controversial items of the Dodd-Frank financial reform bill, the Consumer Financial Protection Bureau (CFPB) carries great promise for supporters of reform as an institutional check on the more insidious behaviors of the financial services industry. Headed informally by Elizabeth Warren in an advisory role, the CFPB is currently building its operations in preparation for July 21st, 2011 when much of its authority goes into effect. However, the financial sector and its congressional allies seek to prevent the agency from commencing operations in its current form.

Summary: The recent Financial Services hearing, held on Wednesday April 6th, examined four specific proposals:

• H.R. 1121, the Responsible Consumer Financial Protection Regulations Act of 2011, would change CFPB governance from a single director to a five-member commission, appointed by the President, with no more than three members from the same political party.

◦ H.R. 1121 Sponsor: Rep. Spencer Bachus (R-AL6). Cosponsors: 29 (all Republicans). Full list at http://thomas.loc.gov/cgi-bin/bdquery/z?d112:HR01121:@@@P

• H.R. 1315: Consumer Financial Protection Safety and Soundness Improvement Act of 2011, would make it easier for the Financial Stability Oversight Council to overturn CFPB regulations by requiring a simple instead of 2/3 and expanding the conditions justifying such an overruling.

◦ H.R. 1315 Sponsor: Rep. Sean Duffy (R-WI7). Cosponsors: 2 (Reps. Bachus (R-AL6) and Shelley Capito (R-WV2))

• Two discussion drafts, not yet assigned bill numbers, were also reviewed in the hearing. One would prevent the CFPB regulators from participating in bank examinations before July 21st, and the other would strip the CFPB of its regulatory powers until/unless a director is appointed and confirmed by the Senate.

Another proposal not discussed in the hearing, H.R. 1355 by Rep. Randy Neugebauer, would move the agency from the Federal Reserve into the Treasury Department, thus subjecting it to the annual appropriations process.

CBO Score: Agency costs $5.9 billion over 10 years, but financed by Federal Reserve rather than congressionally approved spending. More details:http://cbo.gov/ftpdocs/121xx/doc12120/03-29-Dodd-Frank.pdf

Supporters: Most Republicans, financial sector and allied organizations, etc.

• Supporters claim the fledgling agency is too broad in scope with too few curbs on its power, and balance must be restored to provide more Congressional oversight and bipartisan input. Yet most, if not all, supporters simply believe the agency should not exist at all.

Opponents: Most Democrats, Americans for Financial Reform, etc.

• Opponents point to the recent financial meltdown as proof that greater institutional checks on the financial sector are needed. They believe the current structure of the CFPB ensures it will maintain the flexibility to carry out its mission as a watchdog effectively.

Further links
H.R. 1121 full bill text: http://www.govtrack.us/congress/billtext.xpd?bill=h112-1121
H.R. 1315 full bill text: http://www.govtrack.us/congress/bill.xpd?bill=h112-131
Consumer Financial Protection Bureau official website:http://www.consumerfinance.gov/
Financial Services Committee hearing page:http://financialservices.house.gov/hearings/hearingDetails.aspx?newsid=1833
CNN article reviewing the hearing:http://money.cnn.com/2011/04/06/news/economy/republicans_consumer_bureau/
The Hill article summarizing the bills and key supporter arguments: http://bit.ly/hq18p2
Americans for Financial Reform press release on the hearing: http://bit.ly/eXr0oc

Tags: 90 Second Summaries, CFPB, Consumer Financial Protection Safety and Soundness Improvement Act, Economy, Elizabeth Warren, H.R. 1121, H.R. 1315, Main Street Insider, Responsible Consumer Financial Protection Regulations Act (all tags)

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