FACT CHECK on Ranking Member Barney Frank’s “believe it or not” claims on oil speculation and the CFPB
Washington,
May 11, 2011 -
Claim: During a May 10 appearance on MSNBC, Ranking Member Barney Frank said, “We will be voting this week in the Committee on Financial Services on a Republican bill, believe it or not, which would make it impossible to deal with speculation in the oil industry.”
FACT: Don’t believe it because this allegation is simply untrue. The Commodity Futures Trading Commission (CFTC) currently has the ability to impose position limits on the trading of commodities, which obviously includes oil. The bill the Committee will consider (H.R. 1573) merely gives regulators additional time to write and review the new rules governing position limits for derivatives. There is nothing in the Republican bill that would prevent the regulators from clamping down on oil speculation. The regulators already have that power. In fact, before any regulator can establish position limits on any swaps, they must have trading information.
The Republican bill mandates that the Securities and Exchange Commission (SEC) and CFTC complete the trade reporting rules by the original Dodd-Frank Act deadline of July 21, 2011. Once this new trading information is gathered, future rules on position limits could be made. However, we believe claims that H.R. 1573 “makes it impossible to deal with speculation in the oil industry” are political posturing. H.R. 1573 simply gives regulators more time to get the rules right and implement them in a way that does not put the U.S. at a competitive disadvantage with the rest of the world.
Claim: In this same appearance on MSNBC, Rep. Frank also claimed the Committee is considering bills that would “undo the Consumer Protection Agency.”
FACT: Not even close to being true. None of the bills the Committee will consider this week stops the Consumer Financial Protection Bureau (CFPB) from fulfilling its mission. In fact, these bills will promote robust consumer protection and bring needed transparency, oversight and accountability to this massive new government bureaucracy.
H.R. 1121 establishes a five-member, bipartisan commission to lead the CFPB. This is exactly what House Democrats, including Rep. Frank, proposed and voted for last Congress 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 establishment of a five-member, bipartisan commission to govern the CFPB will promote accountability, protect the CFPB from becoming captive to special interests, and ensure greater consistency in consumer protection rules.
H.R. 1667 ensures a Senate-confirmed director is leading the CFPB before this government agency is able to exercise all its powers. Because the Dodd-Frank Act places so much authority — with such little accountability — in the hands of one person, it provides that the President‘s nominee for the Bureau‘s Director must be vetted and approved by the Senate. Senate confirmation of the President‘s nominee is explicitly required by the Dodd-Frank Act that Rep. Frank voted for.
The President is free to nominate whomever he pleases. But after almost a year, he still has not nominated anyone for CFPB director. Because the Bureau will be, effectively, whatever its director wants it to be, the legitimacy of the CFPB depends on ensuring that its director is nominated and confirmed in accordance with the requirements of both the Dodd-Frank Act and the Constitution.
This is not a partisan view. The former chairman of the Senate Banking Committee and co-author of the bill that creates the Bureau -- Chris Dodd – said: “We need a director. And someone that‘s confirmable. And anything short of that, I think, you put this bureau in some jeopardy.”
H.R. 1315 also provides meaningful oversight and accountability to the CFPB. This bill clarifies 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. The rules written by the CFPB will have far-reaching implications. The Dodd-Frank Act makes these rules essentially unreviewable. H.R. 1315 is a common-sense bill that ensures there are checks and balances in the rulemaking process.
