A prominent consumer advocacy organization is hitting back at attempts to limit the authority of a nascent federal agency designed to protect Americans from the financial abuse rampant in the lead-up to the 2008 economic meltdown.
The Consumer Financial Protection Bureau (CFPB) is already subject to sufficient oversight and should not be hamstrung by any more constraints on its ability to protect consumers, according to Consumers Union, the nonprofit publisher of Consumer Reports.
The organization issued its statement Tuesday, the same day House Republicans held a hearing designed to rein in the new agency, which was established by last year’s financial reform law.
The CFPB is to ensure that financial companies provide consumers with the information they need to understand the true costs and risks of different products. It has been charged with identifying and stopping unfair, deceptive, and abusive financial practices and keeping the rules governing financial service products up-to-date.
“Current law already provides the needed balance on the CFPB’s authority without undermining its mission to serve as a watchdog for consumers,” says Pamela Banks, senior policy counsel for Consumers Union. “If CFPB opponents get their way, consumers will end up with a lap dog that’s all bark and no bite.”
Under current law, any new rules adopted by the CFPB can be set aside by a two-thirds vote of the Financial Stability Oversight Council (made up of representatives of other banking agencies) if it determines that the rules put the stability of the financial system at risk. Other financial regulators are not subject to this kind of veto. In addition, the CFPB’s funding is already subject to a ceiling limit. No other financial regulator has this kind of statutory limit on its funding, Consumers Union notes.
Earlier this month, the House Financial Services Committee approved bills that would make it easier for other financial regulators to nullify new CFPB rules, politicize the watchdog’s budget by subjecting it to the appropriations process, and create more bureaucracy by replacing its director with a five-member commission. Forty-four members of the Senate have signed a letter pledging to oppose any nominee to head the CFPB unless similar changes are made.
“Consumers deserve a watchdog that can take on shady loans, hidden bank fees, and the latest financial scams,” says Banks. “It’s time for Congress to let the CFPB do its job and stop putting the interests of the big banks and Wall Street over consumers.”
‘Fair And Transparent Markets’
Elizabeth Warren, who first proposed an an agency such as the CFPB, is setting it up as special advisor to Treasury Secretary Timothy Geithner. Warren, who many on the left hope becomes President Obama’s nominee to be CFPB director, was to defend the CFPB at the hearing.
“At the consumer bureau, we believe in markets – markets that make prices and risks clear and that give consumers the basic information they need to determine who is offering the best deals,” Warren says in her prepared testimony. “Our primary goal is to make markets for consumer financial products and services work in a fair, efficient, and transparent manner. That means ensuring that consumers have access to information to help them understand the terms of the deal.
“Fair and transparent markets encourage personal responsibility and smart decision-making. When consumers are presented with a clearer choice between two financial products and they can easily know the costs, benefits, and risks of those products, they will be better able to make decisions that work for themselves and for their families,” she adds.
The CFPB is still under construction, and as such, has gone out of its way already to be open and transparent, Warren says.
“That is why we launched our website in early February, more than five months ahead of the time the agency would assume many of its powers,” she says. “We posted our draft organizational chart when we launched, and we have posted additional information about our budget and our progress in standing up the new agency over the time since. We have also consulted with various organizations dedicated to transparency in government to explore how we might add more information to our website or provide other useful data to the public.
“We are committed to letting everyone know how we are working for the American people,” Warren adds. “One way we have sought to accomplish that is through the public release of my calendar. We began to post my calendar to the Treasury website proactively on November 24, 2010, even before we launched our website. We have now posted my calendar online each month and will continue to do so as a commitment to our openness.”
Scott Nance is the editor and publisher of the news site The Washington Current. He has covered Congress and the federal government for more than a decade.