Republicans take aim at new consumer protection agency
WASHINGTON (Reuters) - Senate Republicans took pot shots at the new Consumer Financial Protection Bureau on Tuesday, saying it would require more than 7.6 million man hours alone to comply with a rule on international money transfers.
The ranking republican on Senate Banking Committee, Richard Shelby, criticized the rule passed by the CFPB earlier this month that required banks and other institutions to disclose more about the fees and exchange rates associated with international money transfers known as remittances.
"Things are not getting better, just bigger and more unaccountable," Shelby said at a hearing examining the CFPB. "In fact, our financial regulators have become bureaucracies that are now too big to oversee and it is only getting worse under Democrat rule."
The CFPB, which opened for business in July 2011, was created as part of the Dodd-Frank financial oversight law to police financial products such as mortgages and credit cards.
Democrats have welcomed the bureau as a way to protect consumers from abusive lending practices that occurred in the years leading up to the 2007-2009 financial crisis such as pushing borrowers into loans they did not understand and could not afford.
Republicans and business groups have criticized the agency, saying it is virtually unchecked and will hurt lending and put small banks out of business.
Republicans wary of the agency's independence from Congress blocked the nomination of Richard Cordray - a former Ohio attorney general - to head the CFPB, leading President Barack Obama to use a controversial recess appointment to install him.
Cordray was pressed on Tuesday about the effect regulations to contain abusive and fraudulent loans would have on community banks.
He responded that the worst damage to community banks was the result of a "complete lack of regulation" of bigger competitors who made unwise loans.
But added: "We will be mindful of burdens that we're imposing on them."
Republican Senator Bob Corker hammered Cordray on accountability, asking who funded the agency.
"Who is it exactly that you report to?" he asked.
"In my view, I report to Congress," said Cordray, while acknowledging that his agency is funded by the Federal Reserve.
Senator Charles Schumer, a Democrat, said opposition to the CFPB was dwindling because it was hard for Republicans to continually argue against an agency that protects consumers.
"It's a losing fight politically for them," he said. "These are vital issues for the American consumer ... People are tired of obstructionism for the sake of obstructionism."