Yesterday, House Republicans voted to significantly weaken the newly created Consumer Financial Protection Bureau (which officially opened its doors yesterday), approving a bill that would both abolish the position of Bureau director and make it easier for bank regulators to veto the Bureau’s regulations. Republicans said during the debate and beforehand that they weren’t trying to weaken the agency, just reform it.
“Now that the CFPB’s been passed into law, I think it’s incumbent on us to try to work to see that it’s a success,” said House Financial Services Chairman Spencer Bachus (R-AL). “I really am just amazed at the hyperbole of the dismantling and the ruining of the agency and the weakening of the agency,” added Rep. Shelley Moore Capito (R-WV).
However, Rep. Barney Frank (D-MA) — whose name is on the Dodd-Frank financial reform law — isn’t buying it. In an interview with ThinkProgress, Frank called the GOP’s newfound concern for the Bureau’s success “a lie.” “That’s just nonsense,” he said:
They believe that you should not have an independent agency. Bachus said it on television yesterday, on CNBC…Now, what they want is for consumer protection to continue to be subordinated to bank regulation. By the way, it’s not very nice about the banks, because it apparently says that if they have to treat consumers fairly, they can’t make a living. I think they’re too hard on the banks…The major part of [the Republican] bill, which they didn’t want to talk about very much yesterday, would put the bank regulators in a position to veto anything the consumer bureau did. But this argument that they were for it and just wanted to improve it is a lie, because last year they wanted to kill it.
The Consumer Protection Bureau — unlike the other financial regulators — is already subject to veto if two-thirds of the Financial Stability Oversight Council (of which the bank regulators are a part) votes to override its rules. The GOP’s bill would have given the Bureau even less of a voice in regulatory matters, even though the financial crisis made abundantly clear that consumer protection constituted a gaping hole in the regulatory framework.