GOP targets consumer bureau
House Republicans are renewing their push to tighten the leash on the Consumer Financial Protection Bureau.
On Wednesday, lawmakers on the House Financial Services Committee will discuss 11 different bills that would alter how the Bureau goes about its business.
Republicans argue the agency launched by Sen. Elizabeth Warren (D-Mass.) has far too much power and too little oversight.
“The CFPB is arguably the single most powerful and least accountable agency in all of Washington,” said a committee spokesman. “These bills are common sense steps to make the Bureau more accountable and transparent to the people it is supposed to serve.”
The new bills represent a shift for the GOP.
Republicans have long pushed to alter the agency’s structure, but the measures show the party is targeting its criticisms.
The bills on tap would change how the CFPB holds meetings, conducts research, collects data, examines institutions, and writes rules.
For example, one bill from Rep. Shelley Moore Capito (R-W.Va.) would change what the CFPB does with the fines it collects. Currently, any penalties the CFPB collects go into its Civil Penalty Fund, which is then used to fund financial education programs.
CFPB Director Richard Cordray said earlier this month the agency has collected over $3.5 billion from financial bad actors, although a large portion of those funds were used to pay back wronged consumers.
Under Capito’s bill, the CFPB could still pay back consumers through fines, but any excess funds would go straight to the Treasury Department. Republicans argue that relying on a penalty fund to pay for education programs could actually incentivize the CFPB to levy fines, and point out that other financial regulators do not have a similar arrangement.
Another measure would create a devoted inspector general just for the CFPB. Currently, the agency receives oversight from the Federal Reserve’s inspector general, since the agency is technically housed within the central bank. But GOP lawmakers contend an agency with 1,300 employees requires its own watchdog.
Republicans have long resisted the CFPB. They opposed its inclusion in the Dodd-Frank financial reform law, and repeatedly tried to alter its structure after it was created. Advocates of the bureau argue this new set of bills is just another attempt to defang something Republicans have long opposed.
“These bills are designed to tie the CFPB in knots. I don’t see any one of them that’s necessary in any way, shape or form to make the CFPB more responsible to the government or to the American people,” said Ed Mierzwinski, consumer program director at U.S. PIRG. “They’re trying to kill the CFPB by a death of a thousand cuts.”
Any effort to alter the CFPB’s operations is likely to run into staunch Democratic opposition. House Democrats have long opposed GOP efforts to alter the CFPB. Senate Democrats have refused to take up any CFPB measures, and more broadly have been reluctant to consider any legislation that would alter Dodd-Frank until it is fully implemented.
It was that standoff that led to a long delay in the confirmation of the bureau’s first director, Richard Cordray. President Obama actually installed Cordray to the job temporarily via a recess appointment, and then he was only confirmed after Senate Democrats changed procedural rules so nominees could be confirmed with a simple majority.
That change undercut GOP efforts to alter the agency by removing much of their leverage. Republicans long said they would refuse to confirm Cordray until the agency’s structure was changed to make it easier for other regulators to veto CFPB initiatives, subject the agency to congressional appropriations and replace the director position with a bipartisan board.
Republicans still want those changes, but Wednesday’s hearing shows they are broadening how they want to tweak the agency.
Another bill on tap would require the CFPB to open some of its meetings to the public. Rep. Sean Duffy (R-Wis.) sponsored that bill after he was not permitted to attend a recent meeting of the agency’s advisory committee.
Wednesday’s hearing on the bills will come hours after a separate Financial Services panel will grill CFPB managers on allegations of discrimination at the agency.
In April, committee members unanimously subpoenaed a pair of CFPB managers after they refused to testify at an earlier hearing. There, an enforcement attorney at the bureau charged that she was discriminated against at the agency, and punished when she complained about it.
Cordray has said he takes such complaints seriously, and has also offered to discuss the matter when he testifies before the panel.