White House threatens veto of GOP bill curbing Consumer Bureau powers

The White House announced Wednesday it would veto Republican attempts to curb the Consumer Financial Protection Bureau (CFPB).

In a statement of administration policy, the administration's Office of Management and Budget announced strong opposition to a GOP bill that would alter the CFPB, arguing it would "expose American consumers and the nation's economy to the same risks that led to the 2008 financial crisis."

If Congress passes any legislation that undermines "the core reforms included in the Dodd-Frank Act," President Obama's senior advisers would recommend a veto.

The CFPB, set to begin work Thursday, was created by the Dodd-Frank financial reform law. However, one year after its enactment, the bureau remains a target of Republican criticism, with charges that it is too powerful and subject to too little oversight.

In an effort to curb the agency, House Republicans will put forward a bill that would make three significant changes to the bureau's operation.

Instead of being run by a single director, the bill would establish a bipartisan, five-person commission at the top of the CFPB. But the administration said such a move would "seriously weaken" the bureau's ability to make decisions and limit its ability to respond to rapid changes in consumer financial products.

The president has nominated former Ohio Attorney General Richard Cordray to serve as the CFPB's first director.

The bill also would prevent the CFPB from assuming transferred powers from other regulators without a confirmed director in place. Currently, the CFPB can begin enforcing powers it receives from other federal regulators without a director, but it cannot begin enforcing new powers created just for the bureau.

The administration said "needlessly" delaying that transfer of power would continue to encourage "a fragmented approach" to protecting consumers.

While Cordray has been nominated to head the bureau, he is not expected to win Senate confirmation any time soon, as Republican senators have vowed to block any nominee unless several changes are made to the CFPB.

Finally, the bill would make it easier for the Financial Stability Oversight Council to overturn CFPB rules. The council, which gathers top financial regulators on a single panel, currently can overrule the CFPB if a supermajority of its members determines one of its rules would endanger the financial system. The GOP bill would make it so a simple majority can overstep the CFPB if one of its rules is "inconsistent" with the safety and soundness of a financial institution.

The administration maintained that the original check is sufficient and that expanding the council's overruling power would impose "unwarranted restrictions." It would "significantly impede the bureau's ability to protect American consumers from unfair, deceptive and abusive practices."

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