May 4 (Bloomberg) -- U.S. House Republicans, who almost unanimously opposed the creation of the Consumer Financial Protection Bureau, took the first steps to reshape the agency being created under the Dodd-Frank Act.
A House Financial Services subcommittee, voting along party lines, approved three bills designed to restrict powers granted to the agency and its director under the financial-regulation law approved last year by a Democrat-led Congress.
“Some have characterized these measures as an attack on the CFPB, but I couldn’t disagree more,” said Representative Shelley Moore Capito, the West Virginia Republican who leads the Financial Institutions and Consumer Credit subcommittee. “These three bills are an effort to make sure that Congress is doing its job and there is a watchdog for the watchdog.”
The subcommittee approval marks the first legislative action in a fight between the Republican members of the full committee and Elizabeth Warren, the Obama administration adviser assigned to prepare the agency to begin operations on July 21. Warren, a Harvard Law professor credited with conceiving the consumer bureau, has clashed with Republicans over the agency’s powers as well as her own authority as a presidential adviser.
The three bills would replace the director envisioned by Dodd-Frank with a five-member bipartisan commission, give a council of regulators more power to veto bureau rulemaking and delay the transfer of the agency’s powers until a director is nominated by the president and confirmed by the Senate.
While the bills have support in the Republican-controlled House, they are unlikely to win needed support from Obama and the Democrats who control the Senate.
Democrats on the House panel and consumer advocacy groups have backed Warren, noting that the bills -- and others like them -- are aimed at crippling Dodd-Frank.
“The real reason for the bills is to delay, distract and weaken the CFPB before it even goes into effect on July 21,” Representative Carolyn Maloney, a New York Democrat, said today.
Financial Services Committee Chairman Spencer Bachus, the Alabama Republican who sponsored the bill to install a commission, said the proposal is similar to what the House agreed to during debate over what became Dodd-Frank. The single director was approved in final negotiations.
Attacks on the Republican proposals are “both unfounded and unfair,” The current structure of the CFPB -- with a director appointed by the president confirmed by the Senate -- is “radical” in comparison to similar agencies, he said.
The subcommittee approved the bill 13-7.
Center of Debate
Warren, who didn’t attend today’s meeting, was nevertheless at the center of discord between Republicans and Democrats.
“This whole debate is clearly about Elizabeth Warren, so let’s have the debate about Elizabeth Warren,” said Maloney, the subcommittee’s top Democrat.
Maloney offered an amendment to the commission bill that would, among other things, require the chairman to be “credited with coming up with the Consumer Financial Protection Bureau” and “standing up the Consumer Financial Protection Bureau.”
Warren is credited with initiating the idea of the bureau in a 2007 article published in Democracy, a Washington-based quarterly journal. President Barack Obama last year appointed her to shape the agency.
“In all of my years in Congress, I do not believe I’ve ever seen an amendment or bill written for one individual,” Capito said after the amendment was introduced. The subcommittee rejected the proposal.
The Republican bills were not aimed at Warren and efforts to portray the measures as a way of expressing dislike for her have “created somewhat of a political circus,” Capito said after the meeting.
“The CFPB is much bigger than one person and one idea,” she said. “It’s ridiculous to think a single person can set up a massive agency from start to finish without others offering suggestions on how to develop it.”
Obama hasn’t nominated a director and is running out of time to do so before the bureau’s start date. Warren remains in the running for the position, an Obama administration official said last month.
Capito introduced legislation that would postpone the transfer of power to the bureau from other regulators until a director is confirmed. The subcommittee approved that bill 13-8.
A third measure would allow the Financial Stability Oversight Council, a 10-regulator panel created by Dodd-Frank, to overrule a CFPB regulation with a majority vote. Current law requires a two-thirds vote by the FSOC, which was established to guard against threats to the financial system.
“We have to make sure we have a sufficient review process,” Representative Sean Duffy, the Wisconsin Republican who sponsored the bill, said today.
The subcommittee approved the bill 13-9.
All three bills were attacked by consumer groups as attempts to water down the new bureau before it begins work.
“Passage of these bills would virtually guarantee that the CFPB would be a weak and timid agency without the will or ability to curb the kind of financial abuses that caused the nation’s worst financial crisis since the Great Depression,” Travis Plunkett, legislative director for the Consumer Federation of America, said today in a statement.
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