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| Elizabeth Warren |
Elizabeth Warren and the CFPB are up against what she estimates to be a $3 trillion consumer financial services industry, which views the bureau as a potentially grave threat to its prosperity.
The new Consumer Financial Protection Bureau (CFPB) is a key element of the 2010 Dodd-Frank financial reform legislation. The bureau’s mission is mostly about making it easier for consumers to understand the often indecipherable fine print that financial firms throw at them. The CFPB will inherit consumer protection responsibilities from seven agencies and assume powers to police “unfair, deceptive, or abusive” financial services products. It will write new rules and enforce existing ones for banks with assets of $10 billion or more and the tens of thousands of companies in the shadow banking industry—payday lenders, student loan companies, mortgage brokers, debt collectors, pawn shops.
In part because it’s one of the strongest aspects of Dodd-Frank, the CFPB has become a favorite target of Republican attacks. The CFPB has been called “one of the greatest assaults on economic liberty in my lifetime” (Representative Jeb Hensarling) and “the most powerful agency ever created” (Representative Spencer Bachus). The Wall Street Journal opinion page denounced Interim CFPB Director and Consumer Advocate Elizabeth Warren and the bureau three times in one week in March. And the bureau hasn’t even officially launched!
On May 13 the House Financial Services Committee passed three bills designed to weaken the CFPB, which goes live on July 21. Freshman Representative Sean Duffy, the telegenic former star of The Real World: Boston, denounced the CFPB as a “rogue agency” with an “authoritarian structure” and introduced legislation to give existing banking regulators greater authority to override the bureau’s new rules. Other bills passed by the committee sought to change the structure of the bureau from a single director to a bipartisan commission, making it harder to act quickly and decisively, and prevent the bureau from assuming power until the Senate confirms a director. Forty-four Senate Republicans recently announced they would not approve any nominee for the CFPB unless the GOP proposals were implemented.
Wonder why the Republicans are against Warren and the CFPB? To make a long story short, this is all about money.
In recent months groups opposed to the bureau, such as the American Bankers Association (ABA), the American Financial Services Association (AFSA), the Credit Union National Association (CUNA), the Independent Community Bankers of America (ICBA), the Mortgage Bankers Association (MBA) and the National Association of Federal Credit Unions (NAFCU), have donated thousands to Sean Duffy’s re-election campaign.
The three chief sponsors of the CFPB bills—Duffy, Bachus and Shelley Moore Capito—received a total of $1.4 million from the finance, real estate and insurance sector during the 2010 election. Now they’re returning the favor. The GOP Congressional assault on the CFPB is a clever way for the caucus to appeal to the Tea Party’s antigovernment fervor while attracting prodigious campaign contributions from Wall Street and forcing the Obama administration to play defense on yet another critical piece of legislation.
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