Senate Reps and Dems Butt Heads Over Procedure, with Consumers’ Protection at Stake
GOP senators began another round in the legislative showboating that is the Senate confirmation of presidential appointees. Using an arcane Senate rule of dubious legality and feasibility, Republicans are considering using a procedural loophole to prevent a recess appointment to the Consumer Financial Protection Bureau, a tactic that the Democrats employed against President George W. Bush in 2007. They hope to force President Barack Obama to accept oversight of the agency by both Congress and the banking industry.
The bureau, legislated into existence by the Dodd-Frank Act of 2010, has a mission to ensure that “markets for consumer financial products and services work for Americans.” It has jurisdiction over banks, credit unions, payday lenders, mortgage and foreclosure operations, and securities firms. According to incoming enforcement chief Richard Cordray, the bureau’s priorities will be student loans, credit cards, and mortgages.
The CFPB is hamstrung without a formal director (its current head, Elizabeth Warren, was not confirmed by the Senate and is not its official leader). Although the agency is scheduled to open its doors on July 21st, without a director it can only counsel the Treasury Department and is barred from enforcing regulations. In addition, the bureau is subject to far more oversight than any other regulatory agency. It cannot appropriate funds itself, and is limited to a fixed percentage of the Federal Reserve’s operating budget; is specifically barred from implementing interest rate caps; and is subject to a veto by the Treasury Department’s Financial Stability Oversight Committee (FSOC), Congress, and judicial review.
Obama hopes to appoint a director, presumably Warren, so that the CFPB would have some weight behind its many recommendations, and ideally wished to do so before the bureau officially came into its powers. But Republicans, unhappy about the CFPB’s very existence, have sought to dilute, weaken or outright block the bureau’s powers. Senator Richard Shelby of Alabama, in particular, is focusing his efforts against the bureau.
With his encouragement, 44 Republican senators sent a letter to President Obama last week promising to block his nominee unless he agreed to significant reductions in the board’s power. Not only would they stall the director’s confirmation, the senators threatened, but they would hold up all of his financial services appointments.
What Republicans would change
Among other changes, the Republicans want to replace the one-person directorship of the Consumer Financial Protection Bureau with a five-person committee. According to Mark Calabria, a former top aide to Senator Shelby, "The trade-off might be that, at the end of the day, Shelby sits down with the administration and says, 'Well, make it a board, and in exchange we'll let Elizabeth Warren be the chairman.’”Continued on the next page