Republican Criticisms Of Consumer Protection Board Don’t Extend To Agency That Could Be Helping Homeowners

Our guest bloggers are Julia Gordon, Director of Housing Finance and Policy at the Center for American Progress Action Fund, and David Sanchez, a Special Assistant for Economic Policy at CAPAF.

At this morning’s Senate hearing on Richard Cordray’s nomination to head the Consumer Finance Protection Bureau (CFPB), congressional Republicans hammered home their objections to the Bureau: the CFPB and its director are unaccountable to Congress and have too much power to regulate the financial sector.

Lest anyone misunderstand their intentions, 43 Senate Republicans recently sent a letter to President Obama stating that they will filibuster any nominee to direct the CFPB until they can reduce the agency’s independence and power.

Yet these same Republicans who are so concerned about accountability and the perils of independent agencies have been entirely content to leave the future of housing finance in the hands of a fully independent agency not subject to appropriations: the Federal Housing Finance Agency (FHFA). Ed DeMarco, a Bush holdover who was neither nominated by the President nor confirmed by the Senate, is the current Acting Director of the FHFA.


At this morning’s hearing, Sen. Michael Crapo, the leading Republican of the Senate Banking Committee, summed up the Republican objections to the CFPB:

Unfortunately, the CFPB lacks…transparency regarding and openness regarding its operations, budget, and intended activities….The director…holds unique power to determine the agency’s budget and mission priorities without any public debate or input from Congress.”

The most important Republicans on financial regulation and oversight issues agree. As they’ve said:

House Oversight and Government Committee, under Chairman Darrell Issa: “At a time of prolonged economic strain, American consumers can ill-afford such an unaccountable, unresponsive, and all-powerful financial regulator.”

Rep. Spencer Baucus, the ex-chair of the Housing Financial Services Committee: “The director of the CFPB is given a broad and virtually unlimited mandate to substitute his or her judgment for that of consumers and the free market.”

Yet, this insistence that Congressional oversight is paramount doesn’t apply when it comes to the FHFA, which has almost unlimited authority to regulate housing giants Fannie Mae and Freddie Mac.


While Republicans have used their claim that strict congressional oversight is crucial to justify their effort to defang the CFPB, they are all too willing to cheer while DeMarco makes unilateral decisions that have a profound effect on America’s housing market.

For example, ex-Chairman Baucus has praised DeMarco for using his vast powers to make the most politically controversial decision of his term: a prohibition on principal write-downs on mortgages owned mortgages owned by Fannie Mae and Freddie Mac, even though it would have saved money for taxpayers. Likewise, House Oversight Committee Republicans have lauded DeMarco and urged that he remain an “independent regulator,” and he has only been able to stay in his job because Republicans have refused to confirm a permanent successor.

DeMarco has used his virtually unlimited powers to dramatically reshape housing finance in America — whether by moving forward with plans to markedly change the role Fannie Mae and Freddie Mac play in our economy, creating a new platform for securitizing mortgages, or punishing states for their laws surrounding foreclosures. These decisions will impact nearly all American families, whether they own their home, hope to become homeowners someday, or are simply seeking affordable rental options.

In contrast to the CFPB, which has sought public comment on all its rulemakings and which even invites consumer input on its webpage, FHFA makes most of its decisions far from the public eye, almost never engaging in public rulemaking.

In short, the Republicans love independence — when they like the result. The real opposition to CFPB has nothing to do with agency accountability, but everything to do with ideological objections to consumer protections.