WASHINGTON -- In just their first legislative session since taking control of the Senate, Republicans on the Budget Committee pushed through a Wall Street-supported amendment attacking the Consumer Financial Protection Bureau.
The amendment, offered by Sens. David Perdue (R-Ga.) and Pat Toomey (R-Pa.), is a resolution to move the CFPB's funding away from the Federal Reserve and put it under the direct control of Congress through the appropriations process. This would not only give Republicans an opportunity to slash the bureau's funding, but to leverage its budgeting control to pressure the agency against cracking down on lenders. (Nice consumer bureau you got there. It'd be a shame if something happened to it.)
House Republicans have passed several bills in recent years taking aim at the CFPB, including legislation attacking its funding source and trying to tie up its operations with congressionally imposed red tape. None of those bills were enacted, however, because the Senate was controlled by Democrats. Now that the GOP holds the majority in the Upper Chamber, they're taking a cue from their House colleagues.
Toomey made the case for the amendment before the committee by deploying standard House GOP talking points that have repeatedly been debunked by the Congressional Research Service and others.
"The CFPB is completely unaccountable," Toomey insisted. "It is unique among enormously powerful regulators in having no accountability to Congress. It has exceeded its authority in part because it's not subject to congressional oversight. And it's frankly outrageous that they are able to operate with the budget that they have and with the latitude they have without having to come to Congress for this oversight."
Sen. Jeff Merkley (D-Ore.) responded by noting that other bank regulators are also not subjected to appropriations, and emphasizing that the CFPB is audited by both the Government Accountability Office and the Fed Inspector General, and is required to report to Congress, testify before Congress and abide by standard regulatory disclosures and processes.
Sen. Bernie Sanders (I-Vt.) also defended the agency.
"Subjecting the CFPB to appropriations is just one way of singling out the one regulator which by statute is a consumer advocate," Sanders said. "This amendment would weaken a very, very important agency. The CFPB has been successful. It is working."
The CFPB amendment passed by a vote of 12 to 10, with every Democrat voting against it.
Its inclusion in the budget resolution is largely a symbolic gesture, since resolutions do not become law. But the amendment, creating what's known as a "spending neutral reserve fund," essentially instructs the Senate to write actual legislation to do what the amendment says. And by following instructions in the budget, such legislation would be protected from some of the more arcane procedural rules opponents would normally use.
While such efforts do little to enact laws, they do lay down very clear markers for what the majority party would like to do, and attacking the CFPB offers lawmakers a host of potential fundraising rewards. The agency is loathed by the big banks behind the subprime mortgage fiasco, credit card companies and payday lenders alike. Since the agency was established under the 2010 Dodd-Frank financial reform law, the CFPB has overhauled mortgage standards, returned billions of dollars to consumers who were bilked by deceptive credit card practices, cracked down on predatory student lending and alerted the Department of Education to deceptive student debt collection. It is currently developing the first-ever federal standards for payday lending.
Three of the Republicans who voted for the bill are up for re-election in 2016 in swing states, including Toomey and Sens. Kelly Ayotte (R-N.H.) and Rob Portman (R-Ohio).