Bills Bringing Oversight and Accountability to CFPB Approved by Committee
May 13, 2011 -
Three bills that will bring transparency, oversight and accountability to the Consumer Financial Protection Bureau (CFPB) were approved by the House Financial Services Committee today.
Financial Services Committee Chairman Spencer Bachus said, “Everyone on this Committee supports robust consumer protection. But there must be real oversight and accountability of every massive government bureaucracy, and that includes the CFPB.”
Chairman Bachus noted the CFPB will be a large and powerful agency with more than 1,000 federal employees. The bureau’s director will have the singular authority to spend hundreds of millions of dollars without Congressional approval, and the ability to decide which financial products and services are available to American consumers. The director’s mandates can be overturned, but only in extremely limited and highly unlikely circumstances by a small group of fellow Presidential appointees – one of whom is the CFPB director.
The CFPB was created by the Dodd-Frank Act as an independent agency within the Federal Reserve but designed in a way to escape oversight and accountability. The bills approved by the Committee ensure checks and balances are in place and the rules issued by the CFPB are fair, consistent and balanced, and do not endanger the safe and sound operations of U.S. financial institutions.
The bills approved by the Financial Services Committee today are:
H.R. 1121, introduced by Chairman Bachus, establishing a five-member, bipartisan commission to lead the CFPB. Placing the CFPB under such a commission is exactly what the House voted for when financial regulatory reform was being considered. Virtually all other independent agencies are governed by multi-member commissions, such as the Consumer Product Safety Commission, the FCC, and the SEC. The legislation was approved by a vote of 33-24.
H.R. 1315, introduced by Rep. Sean Duffy, clarifying that the Financial Stability Oversight Council must set aside any CFPB regulation that is inconsistent with the safe and sound operations of U.S. financial institutions. Under the Dodd-Frank Act, the FSOC can stay CFPB regulations only if two-thirds of the FSOC’s 10 voting members decide that the regulation would put the safety and soundness of the country’s entire financial system at risk. In addition, the bill would change the vote required to set aside regulations from two-thirds of the FSOC’s voting members to a simple majority and would give the FSOC sufficient time to consider the safety and soundness implications of rules. The legislation was approved by a vote of 35-22.
H.R. 1667, introduced by Financial Institutions Subcommittee Chairman Shelly Moore Capito, ensuring a Senate-confirmed Director of the CFPB is in place before the transfer of regulatory authority to the new bureau takes place. If the CFPB does not have a Senate-confirmed Director by July 21, the Bureau may continue to operate under the Treasury Secretary’s authority. The legislation was approved by a vote of 32-26.
“Despite the overheated rhetoric from opponents, none of these bills weakens consumer protection in any way, shape or form. In fact, these bills will help make sure the consumer protection rules issued by the CFPB are consistent, fair and do not endanger the safety and soundness of financial institutions. Endangering the safety and soundness of financial institutions is bad for our economy, and a bad economy is bad for consumers,” said Chairman Bachus.