With just one week left before the launch of the new consumer watchdog agency, House Republicans are preparing a last-minute attack on its structure and funding in what is expected to be a lengthy hearing Thursday morning.
The title of the hearing in the Oversight and Government Reform committee says it all: “Consumer Financial Protection Efforts: Answers Needed.” Committee spokeswoman Becca Glover Watkins said lawmakers want to examine the “intentions, transparency and accountability” of the new Consumer Financial Protection Bureau.
“The American people have a right to know how the bureau will advance and enforce its regulatory assignment,” committee Chairman Darrell Issa (R-Calif.) said in a statement.
The hearing was scheduled as a follow-up to a testy exchange between Elizabeth Warren, the Harvard law professor charged with setting up the bureau, and Rep. Patrick McHenry (R-N.C.) during a hearing in May. Warren told McHenry that she had to leave after the hearing took more time from her schedule than she had allotted for it. He retorted that their staffs had agreed to a longer time. The hearing quickly devolved after that.
Round Two will likely revisit several key concerns that Republicans have voiced since the agency was created last year as part of the Congress’s overhaul of the nation’s financial regulations. GOP lawmakers have questioned Warren’s involvement in ongoing settlement negotiations with some of the nation’s largest mortgage servicers over flawed foreclosure practices. In addition, they have sought to install a five-member commission to head the bureau instead of a single director and make it easier for the Financial Stability Oversight Council to override its decisions.
On Wednesday, Republicans sought to include a provision in a broader appropriations bill that would make the CFPB’s funding subject to congressional approval and limit its budget. Currently, the agency is funded through the Federal Reserve.
Key Democrats -- including Rep. Barney Frank (D-Mass.), one of the authors of the financial overhaul legislation that created the bureau — responded in a letter that “funding restrictions will only serve to harm consumers instead of protecting them.” The White House issued a statement opposing the move and said it would “compromise the Bureau’s independence.”
But the Obama administration has remained mum on a bigger question: Who will lead the agency?
Warren’s official title is assistant to the president and special adviser to the Treasury secretary on the CFPB — a mouthful, to be sure, but it says nothing about leading the agency that she is credited with dreaming up in the first place. Without a director, the CFPB will largely be unable to write new rules or oversee financial institutions other than banks, such as payday lenders and check cashers.
Still, the bureau will take over powers from seven existing agencies when it officially opens for business July 21, and officials have repeatedly said they are ready to jump on the things that they can do without a director.
It has already begun working on new mortgage disclosure forms and setting up an elaborate system for consumer complaints. This week, it detailed plans to examine banks with more than $10 billion in assets. Staff will work out of satellite offices in Chicago, New York and San Francisco, as well as the District. It will have 100 staffers in this division by August and will publish its examination manual on its Web site.
“Starting on July 21, we will be a cop on the beat – examining banks and protecting consumers,” Warren said in a statement.