The still nascent Consumer Financial Protection Bureau is already on its way to becoming the latest victim in Washington’s efforts to make sure American consumers have their voice taken away. Tomorrow, the House Subcommittee on Financial Institutions and Consumer Credit is scheduled to consider a number of bills that, if passed, would undermine the CFPB’s ability to protect consumers.
The biggest of the CFPB killers on the slate is HR 1121, sponsored by Representative Spencer Bachus of Alabama. This bill would replace the Bureau’s directorship with a five-member commission, and we’ve all seen how well that has worked out in other federal regulatory agencies.
“It’s critical for the CFPB to be led by a single director,” says Pamela Banks, Senior Policy Counsel for our sponsors at Consumers Union. “We can’t afford to hamstring the CFPB with an unnecessarily complicated bureaucratic structure. Replacing the CFPB’s director with a commission would slow down its decision making process and make it more prone to internal discord.”
For years, consumer advocates warned that subprime and other exotic mortgage lenders were putting homebuyers at risk. It’s now clear that the failure to act quickly and effectively to protect consumers from these lending abuses played a key role in triggering a record number of foreclosures and the country’s deep recession.
And then there is HR 1315, sponsored by Representative Sean Duffy of Wisconsin. This legislation would make it easier for other banking regulators to veto new rules developed by the CFPB. As things stand now, it would take a two-thirds vote from the Financial Stability Oversight Council (made up of representatives of other banking agencies) to set aside new rules developed by the CFPB. This proposed bill would change it so that only a simple majority vote would nullify new CFPB rules.
“It makes no sense to give the same banking regulators who were asleep at the wheel before the last financial crisis more power to second guess the CFPB,” said Banks. “Current law already provides the needed balance on the CFPB’s authority without undermining its ability to protect consumers.”
As you may have guessed, Consumers Union and other concerned groups are calling on Congress to cut these harmful pieces of legislation off at the pass.
“Congress should reject efforts to turn this new consumer watchdog into a lapdog,” said Banks. “The Consumer Financial Protection Bureau hasn’t even opened its doors yet and opponents of reform in Congress are already trying to weaken it. Lawmakers should oppose efforts to undercut the CFPB and stand up for consumers who deserve a fair deal on their credit cards, mortgages and bank accounts.”
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