U.S. Senate Republicans are threatening to block any nominee to head the Consumer Financial Protection Bureau unless Democrats agree to change the agency’s structure and funding, thereby attacking one of the cornerstones of financial reform in the Dodd-Frank Act, to the delight of financial-industry lobbyists, according to a Bloomberg article entitled “Senate Republicans Plan to Block Consumer Bureau.”
In a letter delivered to the White House, forty-four Republican senators, led by Richard Shelby, senior Republican on the Banking Committee, demanded that the Consumer Financial Protection Bureau’s director be replaced by a board of directors, its funding brought under congressional control, and its operations overseen by other bank regulators.
Since Democrats only control 53 of the 100 votes in the Senate, it appears that they would not be able to produce the 60 votes needed to overcome objections to a nominee.
“For far too long, American consumers have fallen victim to fraud, misleading claims, and powerful special interests and the President believes that American families who were the hardest hit by this financial crisis deserve an independent watchdog to protect consumers and prevent predatory lending and other abuses in the future,” Amy Brundage, a Whitehouse spokeswoman, was quoted as saying.
The Consumer Financial Protection Bureau is meant to serve as this independent watchdog. Under Dodd-Frank, it is authorized to regulate products and financial firms ranging from the largest banks down to mortgage originators and payday lenders. Recently, for example, Consumer Financial Protection Bureau officials said they would consider restrictions on credit-card debt-protection products, from which big card issuers earned $2.4 billion in 2009.
Banks, including Bank of America, Citigroup, and Capital One, and financial industry trade groups, including the American Bankers Association and the Consumer Bankers Association, have lobbied furiously against the Consumer Financial Protection Bureau, seeking to protect their profits and operate on a business as usual basis.
“Republicans fought the creation of a strong consumer watchdog from the start and now they are at it again,” Senate Banking Committee Chairman Tim Johnson, a South Dakota Democrat, was quoted as saying.
Last year, President Obama named Harvard University law professor Elizabeth Warren as an adviser to set up the bureau after then-Senate Banking Committee Chairman Christopher Dodd said she could not get the 60 votes needed to be confirmed as director. However, Ms. Warren, who participated in a 50-state investigation of the mortgage industry by state attorneys general, has not been ruled out by the White House as a candidate for the post, according to the article.
The Consumer Financial Protection Bureau is due to start operations on July 21, 2011. The Obama Administration could deal with the Republican obstruction by making a temporary appointment during a congressional recess, according to the article.
Anticipating such a move, Sen. Shelby was quoted as saying: “Senate confirmation is about accountability and giving the American people a voice in the process. I would hope the president won’t silence the people’s voice.”
Perhaps seeing through the claim that their obstruction is the will of “the people” instead of the will of big banks and their lobbyists, two Republican senators ? Scott Brown of Massachusetts and Lisa Murkowski of Alaska ? refused to sign the letter to Obama.
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