House Panel To Vote On Bills To Rework Consumer Bureau Powers

House Panel To Vote On Bills To Rework Consumer Bureau Powers
The political fight over the new U.S. Consumer Financial Protection Bureau will continue on Wednesday, with a Republican-led House subcommittee prepared to sign off on a trio of controversial bills that would scale back the agency's authority.

Republicans, who have promised vigorous oversight of the consumer bureau, could also use Wednesday's meeting to weigh in on growing expectations among banking industry officials and analysts in Washington that President Barack Obama will nominate White House adviser and vocal banking critic Elizabeth Warren to spearhead the agency.

Rep. Shelley Moore Capito (R., W.Va.), who leads the House Financial Services subpanel, has already made clear that she doesn't think Warren should be nominated for the post.

"First, I support a five-person commission. But, no, I do not believe nominating Warren is the direction the president should take," Capito said.

The three bills up for a subcomittee vote are backed by business groups such as the American Bankers Association but fiercely opposed by consumer advocates. The measures are unlikely to win Senate approval but could gain momentum a couple of years from now if Republicans gain greater control of Congress.

A bill introduced by House Financial Services Committee Chairman Spencer Bachus (R., Ala.) would replace the bureau's director position with a five- person, bipartisan panel.

Bachus has said he believes the bureau "will do a better job carrying out its mission if it is led by a bipartisan commission rather than a single director."

However, Senate Banking Committee Chairman Tim Johnson (D., S.D.) has signaled that he doesn't support the measure.

"This issue of a 5-member commission instead of a single director was already considered during the thorough Wall Street reform debate last year, and agreement was reached that consumers would be protected best with a strong and independent director in place at the CFPB," he said in a statement.

A second bill introduced by Rep. Sean Duffy (R., Wis.) would make it easier for a council of regulators known as the Financial Stability Oversight Council to veto the consumer bureau's actions.

The third bill would prevent the bureau from receiving key regulatory powers before the agency has a director in place. The bureau is on track to gain new consumer protection powers on its July 21 launch date. While banking officials and analysts anticipate that the White House will nominate Warren, the White House has not yet announced its pick and the top job remains vacant.

While the Senate is unlikely to back the proposals in the near-term, the bills could gain greater traction in years to come, analysts say.

"This should set the stage for action in 2013," MF Global Inc. analyst Jaret Seiberg said in a research note this week.

Capito said the bills are "commonsense measures to promote effective and efficient transparency and accountability" at the consumer bureau.

But consumer advocates and Warren, who is in charge of preparing the consumer protection agency for its July launch, have steadily criticized the legislative proposals.

"Many in Congress have made clear their intention to defund, delay, and defang the consumer agency before it can help one family," Warren said in a statement Tuesday. "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."

Similarly, consumer advocates are concerned that the bills will hurt the consumer agency's ability to protect consumers from fraudulent practices related to credit cards, mortgages and other financial products.

"If enacted, these bills will virtually guarantee the agency will be a weak and a timid one without the ability or the will to curb the kind of financial abuses that have caused the nation's worst financial crisis since the Great Depression and that are still harming tens of thousands of Americans throughout the country now," Consumer Federation of America Legislative Director Travis Plunkett said.