Keep an eye on this in the weeks and months ahead.
A House Republican on the Financial Services committee has introduced legislation that would make it easier for Congress to hamstring, or defund, the newly created Consumer Financial Protection Bureau.
Once fully erected, the Bureau will be housed within the Federal Reserve and be guaranteed a percentage of the Fed’s budget, with the option of asking Congress for more money. Rep. Randy Neugebauer (R-TX) proposes keeping it in the Department of Treasury, where Congress would have complete control over its purse strings.
In a brief interview Tuesday, Neugebauer was pretty candid about this.“Moving it on budget over to the Treasury where it’s subject to appropriations, we can have some say-so on how big this organization gets and some of their activities,” Neugebauer said. The goal, he said, is to enhance oversight, and limit the agency’s size. “When it resides in the Fed, then, we really don’t have that opportunity.”
He expects the House to pass his legislation if and when the proper vehicle arrives, and brushes of criticism that this is a backdoor effort to defund the bureau entirely.
“If I was doing that, I’d just drop a bill to eliminate it,” Neugebauer said. “I’m not a big proponent of the agency but I think it is a lot easier to make a case that every government agency needs oversight than it is to make a case to kill it. My compromise at this particular point in time is OK, if we’re going to have one, let’s move it over.”
A similar effort failed along partisan lines in the Senate last Congress. And the CFPB’s chief advocate, Elizabeth Warren, won’t stand for it.
“Many of those who have opposed the CFPB are still trying to chip away at its independence by subjecting it entirely to Congressional appropriations without any dedicated funding from the Federal Reserve,” Warren told the Consumer’s Union Tuesday. “Politicizing the funding of bank supervision would be a dangerous precedent, and it would deprive the CFPB of the predictable funding it will need to examine large and powerful banks consistently and to provide a level playing field with their nonbank competitors.”
Standing up the CFPB was one of the progressive movement’s key achievements in the 111th Congress. They’ll be watching this with great interest.