Rep Cmte Financial Services
Wall Street Journal: A $447 Million Consumer Alert
Washington, Sep 20 -
Oversight and Investigations Subcommittee Chairman Randy Neugebauer writes in today's edition of the Wall Street Journal about the lack of transparency and accountability at the Consumer Financial Protection Bureau, a government bureaucracy created by the Dodd-Frank Act: A $447 Million Consumer Alert
By Randy Neugebauer
Should an unelected Washington bureaucrat be given tremendous power to lead a new federal agency, set its budget and spend more than $550 million with no oversight or disapproval? The Dodd-Frank Act signed into law by President Obama two years ago established the Consumer Financial Protection Bureau, whose director has precisely those vast powers. The bureau to date has avoided giving direct answers to congressional inquiries about how it is spending money.
The Consumer Financial Protection Bureau—the brainchild of Elizabeth Warren, a law professor who is now a Senate candidate in Massachusetts—was created as an independent agency to regulate the offering and provision of consumer financial products or services. But consumer protection is only a small part of the story. Despite the bureau's broad powers, it is not subject to any of the traditional oversight powers of Congress, particularly the "power of the purse," which is the cornerstone of the appropriations process.
The Consumer Financial Protection Bureau, which can draw more than $550 million annually from the U.S. Federal Reserve, has vast power in determining its budget. Once the director has decided that a money draw is "necessary," there is nobody with authority to prevent these funds from being paid out. Not congressional appropriators. Not the Fed. Not even the president's Office of Management and Budget.
What's more, the bureau's transfer requests often come in the form of one-page letters lacking details as to how the money will be spent. By comparison, in order to procure permanent financing for a commercial construction loan in West Texas, 29 separate documents are required—including a business plan and a complete set of building specs. At a time when the federal debt is so high that we are borrowing 40 cents of every dollar we spend as a nation, shouldn't we expect some spending accountability from the Consumer Financial Protection Bureau?
In official statements to the House Committee on Financial Services, the bureau has said it is "committed to promoting a culture of transparency and accountability" and to "using our resources wisely and carefully." The head of the bureau, Richard Cordray, who was installed by President Obama after a controversial "recess" appointment that bypassed Congress this January, has stated that he "fully support[s] . . . continued oversight of the Bureau's operation and budget."
Unfortunately, the bureau's actions speak louder than its words. My House Subcommittee on Oversight and Investigations has tried unsuccessfully to gain greater visibility into the bureau's budgetary planning process. I have repeatedly asked to review the bureau's statutorily required financial operating plans and forecasts. These requests were denied. I have repeatedly requested that the bureau expand its Fiscal Year 2013 budget justification for $447,688,000 to more than a scanty 25 pages. These requests were denied.
Where are the transparency and accountability measures that Mr. Cordray promised the American people? Congress is unable to carry out its constitutional oversight responsibilities if we can't analyze budget plans until after the money is spent.
Another alarming issue is the salary rate of Consumer Financial Protection Bureau employees. Pursuant to the Dodd-Frank Act, the bureau's director may set and adjust employee pay to be comparable to the compensation and benefits provided by the Fed. This means the bureau's employees are paid outside of the traditional government scale.
A review of the bureau's salaries as of Aug. 28, 2012, reveals that approximately 60% of its 958 employees make more than $100,000 a year. Five percent of its employees are out-earning U.S. cabinet secretaries by raking in $200,000 or more annually. The director's secretary alone is paid $165,139 a year.
I look at hardworking Americans—who make a median annual salary of $50,054—and I wonder: Why is it necessary for a government agency, let alone one that was created to assist and protect consumers, to pay the majority of its employees six-figure salaries?
The salaries are the tip of the iceberg. Since the bureau's founding, there have been many questionable expenditures of the sort one might expect from an agency that can spend with impunity. Whether the Consumer Financial Protection Bureau wanted $124,090,000 for undefined "other services," $40 million for building renovations, or decided to provide consumer information in 187 languages (including Tamil and Somali)—the American people deserve to have some visibility into the bureau's decision-making. This is especially important since every dollar the bureau spends is one dollar that does not go to pay down the national debt.
In order to remedy the Consumer Financial Protection Bureau's lack of accountability and to strengthen oversight of the bureau, I have introduced H.R. 1355, "The Consumer Financial Protection Safety and Soundness Improvement Act." The bill would end monetary transfers from the Fed and require the bureau to answer to congressional oversight in order to receive its budget.
The transparency and accountability fostered through the appropriations process would allow Congress to better evaluate and improve the bureau's performance; more easily detect any waste, fraud and abuse at the bureau; and make certain that its policies reflect the public interest. By passing H.R. 1355, Congress will ensure the American people that the bureau will stay true to Mr. Cordray's word that it is using its resources "wisely and carefully."
Rep. Neugebauer, a Republican from Texas, is chairman of the Subcommittee on Oversight and Investigations of the House Committee on Financial Services.
A $447 Million Consumer Alert