Banking & Financial Institutions

GOP report: Consumer bureau looks to be ‘run-away regulator’

{mosads}The document marks the latest in a long-running Republican campaign opposing the bureau. Ever since it was created as part of the Dodd-Frank financial reform law, GOP lawmakers have hotly scrutinized its operations. The agency’s first director, Richard Cordray, was put in place via a contentious recess appointment, after GOP members in the Senate vowed to block any nominee without fundamental changes to the agency’s structure.

The report calls Cordray’s appointment “controversial and legally questionable,” given that the House was holding brief “pro forma” sessions during longer congressional breaks in an attempt to prevent such recess appointments. The White House has argued it could ignore those sessions, lasting less than a minute, for the purposes of making the appointment. A pair of conservative groups and a community bank have filed suit challenging Dodd-Frank and that appointment.

House lawmakers also have pushed legislation that would replace Cordray’s director position with a bipartisan commission and subject its budget to the appropriations process. The Oversight report calls the bureau’s current structure “unprecedented” and contends it deprives the agency of needed checks on its power.

The report also seeks to paint the CFPB as having an inappropriately close relationship with the Obama administration. To make its case, GOP lawmakers point to the president’s appearance before the bureau shortly after Cordray was appointed, Cordray’s attendance of the 2012 State of the Union address as a guest of the first lady and his regular meetings with senior administration officials.

“Although these meetings are not inappropriate per se, the appearance of a close and coordinate relationship between CFPB officials and political elements of the executive branch undermines the bureau’s authority as a neutral and independent regulator,” the report states. “The committee is concerned that this appearance of impropriety could jeopardize the CFPB’s ability to act effectively and independently.”

The report cites an email from a White House official to a CFPB official from January, asking how the CFPB’s work in regulating credit bureaus might “dovetail” with other administration housing relief efforts. Republicans claim the email serves as proof the White House “overtly sought to use the CFPB to further the Obama Administration’s policy objectives.”

A CFPB spokesperson denied any impropriety in the meetings, and that they were part of the agency doing its work.

“As an independent regulator, it is important to meet with other government officials – including members of Congress and their staff, the Administration, our fellow banking regulators, and state and local government leaders,” said spokesperson Moira Vahey. “This dialogue allows us to further our mission of protecting consumers.”

This post updated at 3:10 pm. A prior version of this post incorrectly identified three state attorneys general as signing on to a legal challenge to the CFPB. They signed to a separate portion of the suit challenging Dodd-Frank.


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