House GOP set to move ahead with legislation to limit new consumer bureau

The political tug of war over the new Consumer Financial Protection Bureau will enter another round Wednesday, when House Republicans forge ahead with legislation aimed at curbing the fledgling watchdog’s powers even before it officially opens its doors in July.

The House Financial Services Committee is scheduled to vote on a trio of GOP-backed bills, each of which encapsulates arguments that have lingered since Congress created the consumer regulator last year.

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One bill, sponsored by the committee’s chairman, Rep. Spencer Bachus (R-Ala.), would replace the bureau’s independent director position with a five-member commission. Bachus and other Republicans have insisted that the current structure will give too much power to a single individual.

President Obama has yet to nominate a permanent director for the bureau. But Harvard law Professor Elizabeth Warren — a favorite of consumer advocates but disliked by many Republicans and financial industry officials — has headed the creation of the agency since the fall and is considered a leading candidate.

“If George Washington came back today, or Abraham Lincoln, or if Warren Buffett signed up, I wouldn’t give that person total discretion,” Bachus said in a recent speech, arguing that his efforts had little to do with Warren but with the power of her current position.

Another bill, sponsored by Rep. Sean P. Duffy (R-Wis.), would make it easier for fellow regulators to veto rules written by the bureau. Members of the Financial Stability Oversight Council need a two-thirds majority to overrule the bureau. The new rule would alter that to a majority vote.

The third bill on tap would prevent the bureau from exercising the full extent of its powers until a permanent director is in place — a scenario that could be slow in coming because of the glacial pace of many Senate confirmations.

Warren has remained on the offensive in the face of the continued Republican criticism. She has crisscrossed the country, from Capitol Hill to military installations and late-night talk shows, defending the need for a federal agency dedicated solely to protecting ordinary consumers.

Last week, she took her message to “The Daily Show” with Jon Stewart, where she argued that the debate over the structure of the consumer bureau should have ended last summer when Congress passed its financial overhaul legislation, known as the Dodd-Frank Act. She warned that the bills under consideration by the House committee would “stick a knife in the ribs” of the new bureau.

Warren reiterated that argument Tuesday afternoon.

“Many in Congress have made clear their intention to defund, delay, and defang the consumer agency before it can help one family,” she said in a statement. “These bills are about preventing the CFPB from operating effectively — a dangerous game to play in light of recent lessons in the marketplace and how quickly financial threats to consumers emerge.”

She got an assist from a slew of advocacy groups, which once again rushed to the bureau’s defense. The GOP-sponsored measures “are not about reasonable congressional oversight,” Ed Mierzwinski, consumer program director for U.S. PIRG, said on a call with reporters. “They are an attack on consumer protection.”

Republicans insist otherwise. From the beginning, they have criticized the new bureau — and much of the Dodd-Frank Act — as little more than an unnecessary government overreach that would increase costs on banks and small businesses and constrict access to credit for average Americans.

Even if the bills up for review clear the Republican-led House, the likelihood they ever would become law remains slim. Sen. Tim Johnson (D-S.D.), chairman of the Banking Committee, has shown no inclination to roll back key provisions of the landmark legislation. And any such bill also would have to get past a potential veto from President Obama, who made the consumer bureau a central part of his efforts to overhaul financial regulation.

 
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