Republicans Make Power Play To Gut Consumer Financial Protection Bureau

May 6, 2011 12:11 p.m.
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On Thursday, while House Republicans were dealing with a small Medicare privatization snafu, their Senate counterparts laid down an impossible marker. Forty four of their 47 members have signed on to a letter threatening to filibuster any nominee to head the new Consumer Financial Protection Bureau unless it is dramatically weakened.

“We will not support the consideration of any nominee, regardless of party affiliation, to be the CFPB director until the structure of the Consumer Financial Protection Bureau is reformed,” reads a letter, co-authored by Senate Minority Leader Mitch McConnell and Sen. Richard Shelby (R-AL), ranking member of the Banking Committee.Congress created the CFPB, despite GOP opposition, as part of the Wall Street reform law, to protect consumers from predatory actors in the financial industry. Its intellectual godmother is Elizabeth Warren, whom President Obama has tasked with standing up the agency. Despite her popularity, she’s been a long-shot to run the Bureau when it officially launches — largely because of financial industry and Republican (and even some Democratic) opposition. Indeed, former Banking Committee Chairman Chris Dodd (D-CT) — who poured cold water on the idea of nominating Warren — warned that if Democrats tried to jam a director through the Senate without bipartisan support, Republicans would go to war against the Bureau and try to gut it.

Turns out that’s what’s happening anyhow. Who could’ve predicted?

Specifically, Republicans want the CFPB subject to the appropriations process — something it avoids as an entity housed in the Federal Reserve. They also want to delegate more decision making authority away from the Bureau’s director, and give other regulators — many of which are captured by the financial industry — opportunities to block CFPB rules.

This shouldn’t be a winning fight, if Democrats don’t want it to be. The financial reform law is still fairly popular, and the CFPB is the most popular part of it. President Obama could use recess appointment to fill the vacancy, and take the fight public. At this point it’s a question of how he and Senate Democrats decide to handle it.

Note, not signing the letter were Sens. Scott Brown (R-MA), Lisa Murkowski (R-AK), and John Ensign (R-NV), who stepped down before it was released. Sens. Olympia Snowe (R-ME) and Susan Collins (R-ME), who along with Brown voted for the financial reform law, added their names to the roster.

Read it here.

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