House panel passes bills to ramp up CFPB oversight

House panel passes bills to ramp up CFPB oversight
© Greg Nash

The House Financial Services committee approved two bills Wednesday that would repeal a post-recession bailout fund and give Congress control of the Consumer Financial Protection Bureau’s (CFPB) budget.

The committee passed, 33-20, the Taking Account of Bureaucrats’ Spending (TABS) Act which would subject the CFPB to the congressional appropriations process. The CFPB is currently funded by a dedicated revenue stream from the Federal Reserve and operates on a budget requested by the director.

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Republicans, most of whom oppose the CFPB’s existence, have long been critical of the bureau’s funding process and Congress’s limited control. The TABS Act would give legislators more say over CFPB operations and opens the door to defunding the agency all together.

“Every government agency should be accountable to the elected representatives of ‘We the People’ and the CFPB should not be an exception to that rule,” House Financial Services Chairman Jeb Hensarling (R-Texas) said at the markup. “It is a base matter of congressional oversight.”

Democrats have fought against several Republican efforts to curb CFPB authority, and ranking Democrat Rep. Maxine Waters (Calif.) insisted the TABS Act is intended to “repeal the very existence of the bureau.”

“Whether it is protecting service members from financial predation, guarding students from fraudulent, for-profit schools, or establishing clear rules-of-the-road for payday loans, the Republicans stand in lockstep opposition,” said Waters.

The committee also passed a bill, 34-22, to repeal Title II of Dodd-Frank regulatory reform law. That section created the Orderly Liquidation Authority (OLA), which authorizes Federal Deposit Insurance Commission (FDIC) funding to dismantle a major domestic financial firm without igniting an economic crisis. The FDIC would later be reimbursed through a fee on other large firms.

Hensarling praised a bill passed by the House on Tuesday meant to gear those firms toward bankruptcy instead of depending on the OLA.

“When it comes to the resolution of these large, complex financial institutions, should we have bailouts or should we have bankruptcy? I think most people, particularly on the Republican side of the aisle, believe there should be bankruptcy,” said Hensarling. “There is no one financial institution that should be deemed ‘too big to fail’ and others ‘too small to matter.’”

Waters panned both bills as “tremendously harmful for our nation’s economy” and criticized Republicans for pushing “budget gimmicks to generate illusory savings.”

“Every credible expert on this topic has said that if you want to demand that financial institutions can go through ordinary bankruptcy, you must take proactive steps,” said Waters. “The majority on this committee has advanced no credible mechanism by which we could resolve our largest bank and non-bank institutions.”