Last month, Representative Randy Neugebauer (R-TX)—the powerful chair of the House Financial Services Subcommittee on Investigations and Oversight—told the Huffington Post exactly how he felt about the Consumer Financial Protection Bureau. “I don’t like them,” he said of the agency created under the Dodd-Frank financial regulatory overhaul and which aims to protect consumers from predatory purveyors of mortgages, credit cards and other financial products. He added that he didn’t want the CFPB to “work at all” in the future.
This bold statement was actually a departure from the Republican strategy to date. Instead of attacking the popular idea of consumer protection and attempting to destroy the CFPB outright, the GOP has tried to push a variety of funding and organizational changes that could slowly and quietly diminish the bureau’s effectiveness.
Despite his unusually frank talk, Neugebauer was simply proposing a measure that would prevent the CFPB from being housed in the Federal Reserve—something that will happen later this year—thus making the bureau’s cash flow easier to target in the future.
Another GOP House proposal tried to reduce the bureau’s funding in the meantime, but only in the name of austerity. “I am not opposed to strong financial regulation,” Representative Jo Ann Emerson (R-MO) said during a House debate about CFPB funding. “But at a time when we’re trying to do more with less, I think it’s important for the agencies to do more with less too.”
Republicans brought these indirect assaults into the recent government shutdown standoff, requesting many of these funding reductions and structural changes. But none of them were accepted in the final appropriations bill signed by President Obama last week.
The most Republicans could get—or were ultimately willing to insist upon—was a provision requiring two annual audits of the CFPB. House Speaker John Boehner (R-OH) claimed on his website that there would now be “mandatory audits of the new job-crushing bureaucracy set up under Dodd-Frank,” and that they would be conducted by both the Government Accountability Office and the “private sector.”
That sounds troubling for advocates of financial regulation—will a big bank suddenly be auditing the CFPB? Well, no. Boehner’s chest-thumping statement didn’t mention the CFPB gets to choose the auditor, which the bill text doesn’t say must be from the private sector, but rather “independent”—so it could just as easily be a think tank or university.
In fact, the language requiring the independent audit is brief and quite vague about the scope of the study, and House Democrats who back the CFPB are not very concerned. “The independent private audits of the CFPB will not be consequential,” Representative Brad Sherman (D-CA) told The Nation.
Sherman, who worked closely on the Dodd-Frank legislation, also noted that GAO audits trumpeted by Boehner are already required in the original bill. He said the audit provisions were meaningless “except to the extent it gave [House Speaker John] Boehner the political cover to agree to the CR compromise.”
Representative Barney Frank (D-MA) agreed, and told The Nation that the new audits are essentially cosmetic and were “a consolation prize for not getting the funding reductions.” Frank believes that if anything, the CFPB emerged from the appropriations debate in a stronger position. “It’s an implicit acknowledgment that [CFPB] is too popular to take away,” he said.
While the GOP wasn’t able to slow the CFPB’s mission, and directly attacking Wall Street regulations will likely remain a tricky endeavor for Republicans, there are more opportunities for subtle troublemaking on the horizon. A permanent director for CFPB must be in place by July 21, and that post requires Senate confirmation.
If no director is in place by that date, the bureau will be deprived of many of its regulatory powers. President Obama may permanently nominate Warren, something Republicans will almost certainly try to block—just don’t expect them to be honest about their motivations.