GOP eyes big changes for Wall Street law's consumer bureau

House Republicans are targeting the Wall Street reform law’s consumer protection bureau for major changes. 

Under a GOP-backed bill introduced Wednesday, the fledgling Consumer Financial Protection Bureau (CFPB), a prized piece of the landmark reform law for the White House, would be redesigned to ensure Republicans have a loud say in the work it performs.

ADVERTISEMENT
The bill would rewrite the law so that the CFPB is run by a five-member board with Democrats and Republicans, as opposed to a single director who is now supposed to take over when it goes live in July.

The legislation seems to have been designed with Elizabeth Warren, the architect of the consumer bureau, in mind, though Rep. Spencer Bachus (R-Ala.), the Financial Services chairman, insisted this was not the case. Warren has not been nominated to direct the bureau, but works under the official title of assistant to the president and special adviser to the secretary of the Treasury on the CFPB.

At a hearing on Wednesday, GOP lawmakers accused her of acting as the de facto head of the developing bureau.

The new bill comes on the heels of five other draft bills unveiled by House Republicans earlier this week. Four of those measures would alter or repeal specific provisions of the legislation, known as the Dodd-Frank law. 

Republicans have settled on a strategy of picking apart unpopular pieces of the bill rather than trying to repeal it in full.

Rep. Scott Garrett (R-N.J.) told The Hill on Tuesday that Republicans were not taking on a broad repeal effort on Dodd-Frank to avoid roiling financial markets, but Democrats maintain the legislation is too publicly popular for a broad repeal effort to be successful.

"We're realistic enough to know that going after the entire bill is probably an unreachable goal,” Rep. Shelley Moore Capito (R-W.Va.), who co-sponsored the CFPB bill, said Wednesday.

She and co-sponsor Bachus conceded that while Republicans can push for changes, the law is probably here to stay.

“We're trying to reshape parts of Dodd-Frank,” Capito said. “If we're going to have to live with it, then let's make it better than it is right now.”

Bachus said the bill would bring the CFPB more in line with other federal agencies while reducing the “virtual unfettered discretion” currently given to the lone director of the agency.

“It's just really concentrating too much power into one singular person,” added Capito.

It would also increase Republican input on CFPB matters. While all board members would be appointed by the president and confirmed by the Senate, the legislation would limit just three members of the five-member board to the same political party.

Bachus said the bill remaking the CFPB's leadership was driven by the fact that the Obama administration has yet to nominate a director.

“This is an agency that on July 22 will start enforcing the law,” he said. “We're, what, 90 days out?”

The murky leadership situation was a hot topic at a Financial Services Committee hearing on Wednesday.

Rep. Sean Duffy (R-Wis.) argued that since Warren appears in an introductory video on the CFPB's website, along with her schedule, it appears as if she is running the bureau.

“If it walks like a duck and it quacks like a duck and it looks like a duck, it's a duck!” he said.

Bachus pressed Warren on whether she knew of any White House plans to nominate a director, perhaps even herself, adding that a pick needs to be made “almost immediately.”

Warren simply said that she has had “many conversations” with Treasury Secretary Timothy Geithner about “the qualities of the person who will run the consumer agency.”

“I understand that there will be a nomination soon, but that's all I know,” she said.

Warren also received strong criticism from Republicans for her reported role in negotiating a broad settlement with mortgage servicing companies over widespread foreclosure problems. The GOP has taken issue with the CFPB, which does not officially exist yet and lacks a director, playing a role in the talks.

Rep. Patrick McHenry (R-N.C.) compared her politically appointed position to one held by Karl Rove in President George W. Bush's White House, arguing she had no statutory authority to weigh in on the matter.

“I'm trying to see if you understand why the position you're currently in is controversial,” he said.

Warren repeatedly maintained that she merely responded to requests for advice about the settlement.

“We do not negotiate with private parties,” she said. “We have been asked for advice, and wherever we can be helpful, we are not only glad to be helpful, we are proud to be helpful."