May 25, 2011
Recently the Republican-controlled House Financial Services Committee passed four pieces of legislation designed to place more control and oversight over actions of the Consumer Financial Protection Bureau (CFPB). All four measures have the backing of the banking industry.
The first bill is HR 112, which would replace the CFPB director with a five-member commission. As it currently stands, important safety and soundness regulators—such as the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp.—have only limited oversight over the CFPB director. HR 112 would place a much-needed check upon the director’s unbridled powers.
The second bill is HR 1121, which specifies that the Federal Reserve Bank (FRB) vice chairman be one of the members of the five-member commission. The rationale is that the FRB, in addition to addressing bank safety and soundness issues, has primary responsibility for sustaining the economy. FRB input would bolster this organization’s ability to accomplish its economic mission.
The third bill is HR 1667, which postpones the date for the transfer of authority to the CFPB from July 21, 2011, to the date that a CFPB director is in place. With the CFPB director having unprecedented powers, it certainly makes sense to leave those powers vested in the agencies that hold them today, rather than to transfer them to an open position.
The last bill, HR 1315, gives the Financial Services Oversight Council power to overturn CFPB-mandated regulations with a simple majority vote, rather than the current requirement of a two-thirds vote. Again, the House Financial Services Committee is giving safety and soundness issues precedence over consumer issues. Actually, one could argue that a safe and sound financial services industry is the most fundamental of all consumer issues.
Next on the agenda is to present these bills to the full House of Representatives. After passage by that body, these bills would go to the Democrat-controlled Senate, where their fate is uncertain.
Banking industry advocates must keep abreast of these bills and be prepared to voice strong support, particularly in the Senate.
– S. Joe DeHaven