U.S. House to consider consumer agency bill

Tue Jul 19, 2011 4:39pm EDT

* Democrats say legislation an attempt to hurt agency

* Senate Republicans threatening to block agency leader

By Dave Clarke

WASHINGTON, July 19 (Reuters) - The U.S. House of Representatives is scheduled to vote Thursday on legislation to change the way the new Consumer Financial Protection Bureau would be run, a move Democrats contend is an attempt to weaken the fledgling agency.

The bureau is one of the more contentious parts of the 2010 Dodd-Frank financial oversight bill and Republicans are bringing their measure for a vote on the one year anniversary of the legislation's enactment.

The legislation scheduled to be voted on would have the bureau run by a five-member board rather than a single director and make it easier for the new Financial Stability Oversight Council to overturn bureau regulations.

The initiative has little chance of becoming law since it would have to be approved by the Democrat-run Senate and signed by President Barack Obama, but it highlights the tensions over bureau.

On Tuesday the sponsors of the legislation - Republicans Spencer Bachus, Sean Duffy and Shelley Moore Capito - rejected Democrats' complaints that they want to "defang" the agency arguing their proposals are intended to make the agency more like other financial regulators.

Bachus, who chairs the House Financial Services Committee, said he does not oppose the bureau and that his concern is that the agency needs to give more weight to how its rules could hurt banks' ability to stay in business.

"I think these changes would mitigate these concerns," he said.

Bachus broke with many fellow Republicans saying he does not think it is necessary for the agency to have its budget approved each year by Congress through the annual appropriations process.

"I, for one, much prefer fixing the structure of the CFPB than starving them for funding," he said.

The bureau, which is charged with protecting U.S. consumers from abusive mortgage lending practices and hidden credit card fees, will get its funding from the Federal Reserve under the law.

Requiring the CFPB to have its budget approved by Congress is one of three changes Senate Republicans are insisting upon before they remove their threat to block any nominee to head the bureau.

On Monday, President Obama nominated former Ohio Attorney General Richard Cordray to be the agency's first director.

If the administration does not agree to change how the bureau is funded, have it run by a board and give FSOC more say over CFPB rules, then Cordray's nomination is "dead on arrival," Senator Jerry Moran, a Republican from Kansas, said at a Senate Banking hearing on Tuesday.

Republicans and the banking industry have disparaged the consumer agency as an unnecessary layer of regulation that, if overzealous, could restrict consumer choice and lending.

Democrats have scoffed at these concerns, saying the agency was created to protect consumers against unfair practices that occurred in the run up to the 2007-2009 financial crisis. (Reporting by Dave Clarke; Editing by Tim Dobbyn)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.