At a hearing held by the House Committee on Oversight and Government Reform today, the committee’s GOP leadership debated Elizabeth Warren, the White House’s pick to run the new Consumer Financial Protection Bureau. As the committee argued that new regulations are required to keep the watchdog agency from having “unchecked discretion” over financial matters, Warren responded that such efforts serve to “undermine the consumer bureau before it even begins its work of protecting American families.”

Rep. Patrick McHenry (R-NC), who chairs a subcomittee on financial services, led the charge:

Once fully operational, the bureau will possess virtually unchecked discretion to identify financial products and services that the director determines to be ‘unfair, deceptive, or abusive. [We are] are skeptical that the bureau’s creation, structure and broad discretionary powers are warranted.

[Warren countered:]

I have been told that if you say anything in Washington often enough, it is eventually treated as fact — regardless of whether it is true or false,” she said in prepared testimony. “While making baseless claims might be shrewd tactics for those who want to undermine the bureau’s work, they are flatly wrong.

Pamela Banks, Senior Policy Counsel for Consumers Union, which has opposed recent efforts to dilute the CFPB’s authority, commented:

Current law already provides the needed balance on the CFPB’s authority without undermining its mission to serve as a watchdog for consumers. If CFPB opponents get their way, consumers will end up with a lapdog that’s all bark and no bite.

Under current law, any new rules adopted by the CFPB can be set aside by a two-thirds vote of the Financial Stability Oversight Council (made up of representatives of other banking agencies) if it determines that the rules put the stability of the financial system at risk. Other financial regulators are not subject to this kind of veto. In addition, the CFPB’s funding is already subject to a ceiling limit. No other financial regulator has this kind of statutory limit on its funding.

Recently, Republican Senators said they would block the appointment of Warren or any other candidate to head the new agency unless major structural changes are made, and a House committee passed a bill that would make a range of changes, including allowing other agencies to set aside rules passed by the CFPB.

Elizabeth Warren and G.O.P. Lawmakers Spar Over Consumer Bureau [NYTimes.com]
House Oversight Committee to Hold Hearing on CFPB Today [Consumers Union]

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