CU-Backed Lobby Advances To Gut New Consumer Bureau

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WASHINGTON – Republican lawmakers increased their efforts this morning to water-down the fledgling Consumer Financial Protection Bureau as they seek to block an expected Obama administration nomination of consumer advocate Elizabeth Warren to head the newly created agency.

On a party-line vote, the GOP majority on the House Financial Services Committee voted three bills that replace the single director for the new agency with a five-person board, give NCUA and existing bank regulators veto power over the new agency, and vastly restrict the new agency’s rule-making authority.

The committee action comes a week after 44 Republican senators told President Obama they will block any nomination to head the new consumer agency until the current single director scheme is replaced with a multiple-member board–a thinly veiled threat to block a Warren nomination.

The efforts to gut the new consumer agency are being supported by the credit union lobby. NAFCU told leaders of the Financial Services Committee this week the GOP-backed bills “represent an opportunity to improve the structure and operations of the CFPB from a credit union perspective.”

The nomination of Warren, a liberal Harvard Law professor who fought credit unions and banks long and hard over bankruptcy reform, has become a political football. President Obama, knowing he will have a hard time getting Warren–who created the idea of a consumer financial agency--confirmed by the Senate, has instead appointed her an advisor to the Treasury Department in charge of organizing the new agency. GOP lawmakers see that is a slap in the face because it makes her de facto director of the newborn agency, without the required Senate approval.

But the President is widely believed to be sticking to plans to appoint Warren to head the fledgling agency, one way or another. The agreement of 44 GOP senators to block the nomination means the President will not be able to get the 60 votes he would need to overcome a filibuster by Senate Republicans. But the President could, while Congress is out on one of its many recesses, name Warren as director of the new agency as a so-called recess appointment, which will not require Senate approval. That would enable her to serve until the end of the two-year Congress, or the December 2012.

 

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