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House tries to shackle new consumer agency

By JIM ABRAMS
Associated Press
Posted on Wednesday, 07.20.11

WASHINGTON -- As the new Consumer Financial Protection Bureau officially opened its doors Thursday, the House was considering legislation that would restrict its power.

Republican sponsors of the bill say they are simply trying to promote transparency and accountability in the agency that was created a year ago as part of President Barack Obama's overhaul of the rules governing financial markets.

But the White House has threatened to veto the legislation, saying it would expose consumers to the same risks that led to the 2008 financial meltdown. The Democratic-controlled Senate is unlikely to take up the legislation.

"The Republican majority," said Rep. Yvette Clarke, D-N.Y., at the opening of the debate, "would like the American people to believe that a near-financial collapse never happened."

The agency, created to shield consumers from abuses involving mortgages, credit cards, lending and other financial services, has become the focal point of continued GOP opposition to the financial overhaul law enacted last year. Presidential adviser Elizabeth Warren, who has led efforts to get the agency operating, has been grilled several times at House hearings.

Earlier this week Obama nominated Richard Cordray, the former Ohio attorney general who is the bureau's enforcement chief, to become director. But all 47 Senate Republicans have said they will block confirmation of any nominee unless Obama agrees to change the bureau's structure.

"Senate Republicans have been clear that the structure of the Bureau of Consumer Financial Protection needs to be properly reformed before we consider any nominee to lead it," Sen. Richard Shelby of Alabama, top Republican on the Banking Committee, said Thursday.

The bill would replace the agency's director with a bipartisan five-member commission and withhold new authorities the agency is to receive until the Senate confirms the chairman of that commission. It would make it easier for other financial regulators to block the agency from issuing regulations.

It states that the Financial Stability Oversight Council, which was also created under last year's law, to identify threats to the financial stability of the country and promote market discipline, must set aside any regulation put forth by the consumer protection bureau that is inconsistent with the safe and sound operations of U.S. financial institutions.

Republicans said they were merely trying to install proper checks and balances on the new agency. "This massive new bureau," said Rep. Pete Sessions, R-Texas, "will be led by a credit czar, who will have unprecedented and unchecked authority to restrict product choices for consumers and impose fees on consumer products and financial transactions."

But Rep. Barney Frank of Massachusetts, top Democrat on the House Banking Committee, said Republicans had another motive: "This is as close as they dare come now, because of public opinion, to abolishing the whole agency." The Treasury Department said Thursday that on its opening day the agency's Consumer Response Center began accepting credit card complaints on its new website, consumerfinance.gov. It said the agency would also refer distressed homeowners to housing counselors and, over the coming months, expand its operations to handle complaints about other consumer financial products.

Copyright 2011 The Associated Press

http://www.miamiherald.com/2011/07/20/2323192/white-house-threatens-to-veto.html [no comments yet]


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White House threatens veto of GOP bill curbing Consumer Bureau powers

By Peter Schroeder - 07/20/11 03:54 PM ET

The White House announced Wednesday it would veto Republican attempts to curb the Consumer Financial Protection Bureau (CFPB).

In a statement of administration policy, the administration's Office of Management and Budget announced strong opposition to a GOP bill that would alter the CFPB, arguing it would "expose American consumers and the nation's economy to the same risks that led to the 2008 financial crisis."

If Congress passes any legislation that undermines "the core reforms included in the Dodd-Frank Act," President Obama's senior advisers would recommend a veto.

The CFPB, set to begin work Thursday, was created by the Dodd-Frank financial reform law. However, one year after its enactment, the bureau remains a target of Republican criticism, with charges that it is too powerful and subject to too little oversight.

In an effort to curb the agency, House Republicans will put forward a bill that would make three significant changes to the bureau's operation.

Instead of being run by a single director, the bill would establish a bipartisan, five-person commission at the top of the CFPB. But the administration said such a move would "seriously weaken" the bureau's ability to make decisions and limit its ability to respond to rapid changes in consumer financial products.

The president has nominated former Ohio Attorney General Richard Cordray to serve as the CFPB's first director.

The bill also would prevent the CFPB from assuming transferred powers from other regulators without a confirmed director in place. Currently, the CFPB can begin enforcing powers it receives from other federal regulators without a director, but it cannot begin enforcing new powers created just for the bureau.

The administration said "needlessly" delaying that transfer of power would continue to encourage "a fragmented approach" to protecting consumers.

While Cordray has been nominated to head the bureau, he is not expected to win Senate confirmation any time soon, as Republican senators have vowed to block any nominee unless several changes are made to the CFPB.

Finally, the bill would make it easier for the Financial Stability Oversight Council to overturn CFPB rules. The council, which gathers top financial regulators on a single panel, currently can overrule the CFPB if a supermajority of its members determines one of its rules would endanger the financial system. The GOP bill would make it so a simple majority can overstep the CFPB if one of its rules is "inconsistent" with the safety and soundness of a financial institution.

The administration maintained that the original check is sufficient and that expanding the council's overruling power would impose "unwarranted restrictions." It would "significantly impede the bureau's ability to protect American consumers from unfair, deceptive and abusive practices."

© 2011 Capitol Hill Publishing Corp., a subsidiary of News Communications, Inc.

http://thehill.com/blogs/on-the-money/banking-financial-institutions/172587-white-house-threatens-veto-of-bill-curbing-consumer-bureau [with comments]


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Credit.com’s Levin: Pro-Consumer Doesn’t Mean Anti-Business

By Peter Gorenstein | Daily Ticker – Wed, Jul 20, 2011 7:50 AM EDT

The Consumer Financial Protection Bureau (CFPB) may be doomed even before it officially opens for business. Richard Shelby, the ranking Republican on the Banking Committee, and other Republican Senators say they will block confirmation of former Ohio Attorney General Richard Cordray as head of the new bureau. Meanwhile, the GOP is also trying to weaken the watchdog group's authority, fearing the CFPB will be detrimental to banks and credit card companies. (See: "Indefensible": Credit.com's Levin Blasts GOP Opposition to Warren, Cordray & CFPB [ http://finance.yahoo.com/blogs/daily-ticker/indefensible-credit-com-levin-blasts-gop-opposition-consumer-152835426.html ])

As the name implies — the bureau is designed to protect consumers from predatory financial practices, especially in credit card and mortgage business, and increase transparency between lenders and borrowers.

Adam Levin co-founder and chairman of Credit.com says that's no reason for Washington to oppose the CFPB's mission. "Standing up for the American consumer doesn't mean anti-business," he tells Aaron Task in the accompanying clip.

Levin hopes the group will help prevent another debt bubble and era of irrational consumption. "We've got to raise the level of financial literacy in this country," he says. "We've got to put people on a more level playing field."

But what will make this federal regulatory group any more effective than all the others that were around and allowed the 2008 financial crisis to happen under their watch?

"Up to now there has never been one fully focused" federal consumer protection agency, says Levin.

Copyright 2011 Daily Ticker / Yahoo! Inc.

http://finance.yahoo.com/blogs/daily-ticker/credit-com-levin-cfpb-pro-consumer-stance-isn-115018222.html [with embedded video, and comments]


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