Grassley pushes for consumer bureau watchdog in budget amendment

By Peter Schroeder - 03/22/13 01:35 PM ET

Sen. Chuck Grassley (R-Iowa) has introduced an amendment to the Senate Democrats' budget that calls for an independent inspector general at the Consumer Financial Protection Bureau (CFPB).

The amendment, while nonbinding, would put senators on the record in support or opposition of such a watchdog at the new bureau, which remains a point of partisan contention.

Republicans contend that the agency, created as part of the Dodd-Frank financial reform law, lacks oversight and accountability. Currently, the CFPB does not have its own independent watchdog, but rather is overseen by the Federal Reserve's inspector general, where the bureau is technically housed.

“Inspectors general serve as watchdogs, keeping an eye on the executive branch for Congress and the American people,” Grassley said. “Because this agency is housed within and predominantly funded by the Federal Reserve, there is little independent oversight of it. Sunlight is the best disinfectant, and an inspector general would help create accountability, oversight and transparency in this new government bureau.”

Sen. Tom Coburn (R-Okla.) is a co-sponsor on the amendment.

Other financial regulators, including the Securities and Exchange Commission, Commodity Futures Trading Commission, and the Federal Deposit Insurance Corporation, all have their own independent inspectors general. The Office of the Comptroller of the Currency, which is housed in the Treasury Department, is overseen by the Treasury's version.

Senate Republicans are currently blocking President Obama's nominee for director of the bureau over concerns about the agency's accountability. Republicans are calling for the director position to be replaced with a bipartisan commission and to have its budget brought under the control of congressional appropriators. They also want to give other regulators more power to veto CFPB regulations.

But CFPB backers contend the moves are simply attempts to weaken the agency, which was broadly opposed by Republicans when it was first proposed. Richard Cordray is currently leading the agency, but he was controversially recess appointed after Republicans first blocked the nomination.

Grassley's amendment is one of hundreds proposed to the Senate budget. Senate Majority Leader Harry Reid (D-Nev.) said Friday he was looking to pare down that number as the Senate prepares for a lengthy stretch of votes on the measure.