Business group wants a director in place before consumer bureau issues rules
Tuesday, March 1, 2011; 9:23 PM
Republican lawmakers and financial industry lobbyists lost their fight last year to halt the creation of the Consumer Financial Protection Bureau. But as the new watchdog takes shape, those critics have continued to question the bureau's precise role in the regulatory universe.
The latest effort to limit the reach of the consumer bureau came Tuesday. The U.S. Chamber of Commerce sent a letter urging Treasury Secretary Timothy F. Geithner not to allow the bureau to issue new regulations if it does not have a permanent director in place by July 21, the date the bureau will officially open its doors.
"We hope they'll sort of hit the pause button and not begin to regulate until the bureau is fully constituted," Jess Sharp, executive director of the chamber's Center for Capital Markets Competitiveness, told reporters.
At the same time, Sharp praised the agency for working to simplify disclosure forms that often confuse consumers.
As anyone familiar with the bureau's short history knows, getting a Senate-confirmed director in place might take an awfully long time.
Concerned that Harvard law professor Elizabeth Warren would face a contentious and drawn-out confirmation battle for the post, President Obama appointed her in September to a temporary post overseeing the formation of the bureau.
Six months later, the bureau has hired more than 100 employees and secured prime new office space near the White House. But the president has yet to nominate a permanent director, and the politics of any Obama nominee navigating the Senate confirmation process has grown more complicated since Republicans gained seats in the fall elections.
According to inspectors general for the Treasury and the Federal Reserve, Geithner could manage some - but not all - of the bureau's authorities until a confirmed director takes the helm.
For instance, the secretary could proceed with examinations of banks bigger than $10 billion and make sure they are complying with consumer protections laws, but he couldn't prescribe new rules for nonbank financial firms. Treasury officials also say they have authority to undertake "advance notices of proposed rulemaking," which would not institute formal rules but would both allow officials to gather comment from industry officials and notify businesses of rules that could come down the pipeline.
"We're not trying to create an indefinite delay," Sharp said Tuesday. "We [just] don't want a situation where there's a brief burst of enforcement or regulation out of the Department of Treasury and then find out we have a confirmed director who may want to head in a different direction."
Consumer advocacy groups also are eager for a director to be named. They hope that will lead to a stream of new regulations.
The Chamber of Commerce letter was signed by a collection of industry groups, including the Financial Services Roundtable. It included a number of warnings that critics of the new bureau have reiterated over the past year and a half - namely, that moving too quickly could result in duplicative regulation for small businesses and increase the cost of credit for businesses and consumers alike.
It also came amid a series of hearings by the Republican-led House Financial Services Committee to examine the economic impact of last year's financial overhaul legislation. Later this month, Warren will testify before that committee in a hearing about oversight of the bureau.
Neither Treasury nor consumer bureau officials would comment Tuesday about efforts to slow the bureau's rulemaking efforts or alter its funding. But it's clear that Warren, who has aggressively courted industry groups and key Republican lawmakers, has no intention of putting on the brakes.
"I look forward to testifying about . . . how the consumer bureau's focus on transparency can make the markets work better for consumers and small providers alike," Warren said Tuesday in remarks to the Credit Union National Association.
Later in the day, Warren sent a letter to two members of the House committee in which she reiterated that "our interactions with small financial services providers have had a real impact on the work we are doing" and that "we've taken every opportunity to let small companies know that this office is open to them."