* GOP lawmakers complain about agency's budget, power
* Elizabeth Warren defends role before House panel
By Kevin Drawbaugh
WASHINGTON, March 16 Congressional Republicans
hammered away at a U.S. consumer watchdog agency they have
opposed since its creation last year, criticizing its budget
autonomy and scope of authority at a hearing on Wednesday.
Elizabeth Warren, a Harvard Law School professor who is
leading the formation of the new agency, defended its mission
to protect consumers from predatory financial practices as
mandated under the Dodd-Frank reforms.
"We need a cop on the beat that American families can count
on," Warren told a House of Representatives panel in her first
congressional testimony since being named by the White House to
help set up the Consumer Financial Protection Bureau.
As authorities move closer to a legal settlement involving
a national mortgage foreclosure practices scandal, Republicans
grilled Warren over her agency's role in settlement talks.
"The involvement (of) bureau employees in these discussions
raises serious questions," said Republican subcommittee
chairman Shelley Moore Capito, who chaired the hearing.
Republicans have complained the CFPB's involvement comes
before it has even been fully established. Sources have said
the consumer agency is pushing harder than some bank regulators
for a big monetary settlement and for principal writedowns on
The CFPB, Warren said, will not be a party to any formal
settlement. But she added: "I am glad that the consumer agency
has been able to provide assistance in this important matter."
Warren has not been formally named the head of the CFPB, a
post that requires a nomination from President Barack Obama and
confirmation by the Senate. For now, she is serving as a
special advisor to Treasury Secretary Timothy Geithner.
"I understand there will be a nomination soon," Warren said
when asked when and whether she might be tapped to head the
agency. An outspoken critic of banks, Warren has been seen as a
problematic nomination given banks' clout in Congress.
The CFPB was set up in Dodd-Frank within the Federal
Reserve, with funding from the Fed instead of Congress.
"This agency will be able to act outside the appropriations
process, which means it will not be held accountable for its
actions," said Republican Representative Ed Royce.
Capito said the agency should be part of the congressional
appropriations process, a change many Republicans favor.
Democratic Representative Carolyn Maloney, responding to
comments that the CFPB would have unchecked power, said its
rules could be overruled by other regulators under Dodd-Frank.
Fifty state attorneys general and several U.S. agencies are
probing bank mortgage practices that burst into public view
last year, including the use of "robo-signers" to sign hundreds
of unread foreclosure documents a day.
On March 3, state attorneys general sent banks the outline
of a proposed settlement endorsed by some agencies, including
the CFPB. The Office of the Comptroller of the Currency and the
Federal Reserve, the main banking regulators involved in the
discussions, did not endorse the early proposal.
Negotiations have thus far focused on the top U.S. mortgage
servicers, including Bank of America Corp (BAC.N), JPMorgan
Chase & Co (JPM.N), Citigroup Inc (C.N), Wells Fargo & Co
(WFC.N) and Ally Financial.
Warren took on her new role in September, after irritating
banks and Republicans as head of the Congressional Oversight
Panel that oversaw the bailouts of banks and Wall Street firms
amid the 2007-2009 financial crisis.
(Reporting by Kevin Drawbaugh; Editing by Tim Dobbyn)