Rep. Spencer Bachus, an Alabama Republican in line to take over as chairman of the powerful House Financial Services Committee when the new Congress convenes in January, and Rep. Judy Biggert, R-Ill., are asking the inspectors general for the U.S. Treasury and Federal Reserve to investigate how the fledgling agency is being formed.
In a Nov. 22 letter, the legislators criticized what they called a "clear absence of accountability and transparency" in the Treasury's oversight of the bureau, which is charged under the Dodd-Frank financial reform law with shielding consumers from deceptive and abusive financial practices. According to the WSJ:
While they have little hope of repealing the new consumer agency -- which has broad powers to write rules for mortgages, credit cards and other financial products -- Republicans can work to influence regulators to blunt the agency's power.
Sending critical letters and ordering up investigations are two time-honored ways lawmakers exert influence. In this case, Republicans have two main targets: the Treasury Department, which is running the new agency until it assumes its full powers on July 21, and Elizabeth Warren, who was tapped as a special adviser by President Barack Obama to lead the setup of the bureau.In their letter, Bachus and Biggert asked the IGs to specify Warren's authority in setting up the CFPB, which officially launches in July. The Harvard law professor, who is credited with conceiving the bureau, is overseeing the process as a special adviser to Obama.
Republicans have made no secret of their plans to weaken Dodd-Frank. Bachus, who in July likened the law to a "government takeover of the economy," has in addition to targeting the CFPB pledged to repeal the part of Dodd-Frank that gives regulators authority to close large financial firms. He also has signaled his intent to loosen the "Volcker rule," which limits banks' use of proprietary trading and their investment in private equity and hedge funds; roll back new restrictions on derivatives; and make it harder for investors to hold credit rating agencies liable. Meanwhile, other GOP lawmakers have made thinly veiled threats about reducing funding for financial regulatory agencies.
The Center for Public Integrity, an investigative journalism outlet in Washington, notes that Bachus and Biggert have recently drawn strong financial support from Wall Street. Big banks historically have directed their campaign contributions to both parties, with Democrats enjoying a funding edge earlier in the latest election cycle. But financial firms and industry trade groups shifted their money toward Republican candidates as Dodd-Frank steamed toward passage in July:
Bachus, a critic of the Dodd-Frank reform law, easily won reelection last month with a campaign fueled in part by big bank political action committees, according to Federal Election Commission data. PACs run by Bank of America (BAC), Morgan Stanley (MS), UBS, Capital One (COF), Credit Suisse (CS), Wells Fargo (WFC), the American Bankers Association, the Mortgage Bankers Association, and CME Group (CME) were among the financial services groups that each contributed the legal maximum of $10,000 to Bachus' campaign over the past two years. Another $10,000 donor: a PAC funded by the National Automotive Dealers Association, which successfully won exemption from regulation by the Consumer Financial Protection Bureau.You get what you pay for.
Biggert also collected contributions from PACs run by Goldman Sachs (GS), JPMorgan (JPM), HSBC (HBC), Wells Fargo, Morgan Stanley, CME Group, and the American Bankers Association.
Image from Wikimedia Commons, CC 2.0
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