WASHINGTON — House Republicans celebrated the Consumer Financial Protection Bureau's first day by advancing a bill that would dilute the bureau's authority.
The legislation, which passed 241-173, would replace the agency's director with a five-member commission, make it easier for other regulators to override its rules, and suspend its powers until a permanent leader is in place. Republicans said the changes are necessary to hold the bureau more accountable, but Democrats said the GOP's true intent is to dismantle an agency they never liked to begin with.
"Today there is an assault on the most import thing that's ever been done to protect consumers in the financial area," Rep. Barney Frank, the lawmaker who spearheaded the bureau's creation under the financial reform law, said on the House floor. "This notion that they're just trying to improve it is belied by the fact that they're trying to kill it."
The bill was brought to the House floor as the CFPB officially opened for business Thursday.
Republicans have complained that the bureau's structure — an independent agency, run by a single director, funded outside of the appropriations process — bestows it with too much power and not enough oversight.
A similar measure has been introduced in the Senate, where Republicans have vowed to block the nomination of a director until their demands are met. But the bills are unlikely to win Senate approval while the Democrats are in power, and the president has vowed to veto any measure that would undermine the bureau's effectiveness.
Rep. Spencer Bachus, the chairman of the House Financial Services Committee, said the House bill has been totally mischaracterized, and would do nothing more than address concerns about oversight, thereby improving the bureau.
"It does not gut the consumer financial protection bureau, it is not anti-consumer, it is not an attempt to repeal Dodd-Frank," Bachus said of the bill, which he helped author.
Bachus also noted that an earlier version of Dodd-Frank passed by the House also would have established a commission to run the bureau. He pressed Frank to acknowledge that it was Elizabeth Warren, the architect of the bureau, who originally proposed the commission structure.
"Yes, this is what she originally proposed, and I decided and others on our side … we thought after listening that the five-member commission would be more effective," Frank said.
Bachus also decried the "sham review process" that would allow a council of regulators to block the CFPB rules if two-thirds of them determine the rule would endanger the financial system. The bill would lower that threshold to a simple majority.
But Frank said the provision would put the power to enforce consumer laws back into the hands of banking regulators whom Frank said failed to enforce those rules before the crisis.
It's a thinly veiled attempt to undercut an agency that Republicans have long opposed, he said.
"This is as close as they dare come now, because of public opinion, to abolishing the whole agency," Frank said. "They do understand that politically it's not a good idea to be fully straight-forward about their intentions, and they'd really like to repeal it."
Rep. Carolyn Maloney, D-N.Y., said Republicans appear to be blind to the lessons of the recent financial crisis.
"The Republican strategy to defang, defuse and declaw the CFPB ignores critical issues that contributed both to the credit bubble and the financial meltdown," Maloney said. "Decisions and misleading practices — predatory lending, unsafe credit standards — those practices cost Americans dearly."
Rep. Shelley Moore Captio, R-W.Va., however, noted that the CFPB is not as important to the Obama administration as officials claim.
"The president has had an entire year to nominate the very important person to lead this bureau, and it wasn't until the beginning of this week that he finally got around to doing it," Capito said. "What kind of signal does that send? At least to me, it's sends a signal that it really isn't all that important to have the person there."
