Warren: Keep Congress away from Consumer Bureau's budget

Elizabeth Warren, the architect of the new Consumer Financial Protection Bureau (CFPB), mounted a spirited defense Wednesday for keeping the agency's budget free of the congressional appropriations process.

House Republicans are backing legislation that would bring the CFPB's funding within Congress's control, but Warren said in a speech to the U.S. Chamber of Commerce that there is no "principled reason" for doing so.

"Not one other banking regulator — not one — is subject to appropriations," she said at a capital markets summit hosted by the Chamber. "Requiring the CFPB to go into every examination against a trillion-dollar company knowing that the company could turn its lobbying force against the agency's funding is not a prescription for fair and evenhanded enforcement."

Currently, the CFPB's budget is funded by transfers from the Federal Reserve. Critics of that arrangement contend that it prevents lawmakers from using the congressional pocketbook to exercise oversight over the bureau, but Warren maintained that the CFPB needs to be "insulated from the political process" to ensure fair and consistent supervision.

She added that, while the Chamber fiercely opposed the creation of the CFPB during the debate on the Dodd-Frank financial reform law, the two sides could reach common ground working to ensure a fair, competitive marketplace.

"I know that you believe in it passionately, and so do I," she said, but added later that she will not shrink from pushing new rules.

"Let's not pretend that billion-dollar Ponzi schemes are attributable to too much regulation," she said.

Prior to her comments, House Financial Services Committee Chairman Spencer Bachus (R-Ala.) jabbed Warren for her ambiguous role at the CFPB. Officially titled the special assistant to the president and Treasury secretary for the CFPB, Republicans have accused Warren of running the agency before being appointed by the president or confirmed by the Senate. Warren has maintained that she is simply an adviser helping to set up the new bureau, which goes live in July.

Bachus referred to the CFPB as "the agency which she runs or doesn't run, I've not be able to figure out if she runs it or doesn't."

"I know she hasn't been nominated, she hasn't been appointed," he added.

Bachus also used his comments to the Chamber to back a bill he recently introduced, which would change the CFPB's leadership from a single director to a bipartisan five-member commission. Under his bill, only three of the commission members can be from the same political party.

Bachus maintained that his bill was not targeting Warren specifically.

"If George Washington came back, or Abraham Lincoln, or if Warren Buffett signed up, I wouldn't give that person total discretion," he said.

Speaking more broadly about Dodd-Frank, Bachus struck a dire tone about what the new regulations mean for America's economy.

"We will, in my mind, kill the one thing America is known for all over the world, and that's innovation and entrepreneurship," he said. "It's a sad day for America when we have chosen to abandon what made us great. I can tell you that I'm anxious, and I'm somewhat angry."

Thomas Donohue, the chairman and chief executive officer of the Chamber, backed the bill in his own speech.

"We think a bipartisan, five-person commission would provide a lot more balance and accountability than a single director," he said.

The legislation could garner bipartisan support, since both parties know that eventually they will fall into the minority, he added.

"There are a lot of Democrats that would not like one Republican to be sitting in that seat," he said.

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