WASHINGTON – As the new Consumer Financial Protection Bureau officially opened its doors Thursday, the House was considering legislation that would restrict its power.
Republican sponsors of the bill say they are simply trying to promote transparency and accountability in the agency that was created a year ago as part of President Barack Obama's overhaul of the rules governing financial markets.
But the White House has threatened to veto the legislation, saying it would expose consumers to the same risks that led to the 2008 financial meltdown. The Democratic-controlled Senate is unlikely to take up the legislation.
"The Republican majority," said Rep. Yvette Clarke, D-N.Y., at the opening of the debate, "would like the American people to believe that a near-financial collapse never happened."
The agency, created to shield consumers from abuses involving mortgages, credit cards, lending and other financial services, has become the focal point of continued GOP opposition to the financial overhaul law enacted last year. Presidential adviser Elizabeth Warren, who has led efforts to get the agency operating, has been grilled several times at House hearings.
Earlier this week Obama nominated Richard Cordray, the former Ohio attorney general who is the bureau's enforcement chief, to become director. But all 47 Senate Republicans have said they will block confirmation of any nominee unless Obama agrees to change the bureau's structure.
"Senate Republicans have been clear that the structure of the Bureau of Consumer Financial Protection needs to be properly reformed before we consider any nominee to lead it," Sen. Richard Shelby of Alabama, top Republican on the Banking Committee, said Thursday.
The bill would replace the agency's director with a bipartisan five-member commission and withhold new authorities the agency is to receive until the Senate confirms the chairman of that commission. It would make it easier for other financial regulators to block the agency from issuing regulations.
It states that the Financial Stability Oversight Council, which was also created under last year's law, to identify threats to the financial stability of the country and promote market discipline, must set aside any regulation put forth by the consumer protection bureau that is inconsistent with the safe and sound operations of U.S. financial institutions.
Republicans said they were merely trying to install proper checks and balances on the new agency. "This massive new bureau," said Rep. Pete Sessions, R-Texas, "will be led by a credit czar, who will have unprecedented and unchecked authority to restrict product choices for consumers and impose fees on consumer products and financial transactions."
But Rep. Barney Frank of Massachusetts, top Democrat on the House Banking Committee, said Republicans had another motive: "This is as close as they dare come now, because of public opinion, to abolishing the whole agency." The Treasury Department said Thursday that on its opening day the agency's Consumer Response Center began accepting credit card complaints on its new website, consumerfinance.gov. It said the agency would also refer distressed homeowners to housing counselors and, over the coming months, expand its operations to handle complaints about other consumer financial products.