An amendment to the Economic Development Revitalization Act (S. 782) appeared yesterday that would essentially disarm consumers’ cop on the beat, the Consumer Financial Protection Bureau (CFPB). Amendment #391, proposed by Sen. Jerry Moran (R-KS), would seriously weaken the CFPB’s ability to protect consumers—its only mandate. It puts the same regulators who failed to restrain the reckless subprime lending that led to the housing crisis in a position to paralyze the CFPB’s ability to take action against financial institutions who are harming consumers.
The Moran amendment would replace the CFPB’s independent director with a board dominated by current regulators. Three of the six members of the board would be filled by the prudential regulators at the Office of the Comptroller of the Currency (OCC), the FDIC, and the Federal Reserve; the other three would be appointed by the president in a 2 to 1 party split. A board with an even number of members is a recipe for deadlock and inaction, particularly when prudential regulators have the ability to slow much-needed reforms.
The amendment would make the CFPB the only financial regulator subject to the politicized appropriations process. Financial regulators have been funded outside the appropriations process in order to give them independence against the powerful sway of industry interests. The Moran amendment would make the CFPB the only financial regulator to receive 100 percent of its funding from this process when it is already the only financial regulator with a cap on its budget.
The amendment would add additional barriers to rulemaking. Already, the prudential regulators have the ability to veto the CFPB’s decisions when they threaten the stability of the country’s banking system. The Moran amendment would require the CFPB to consider the impact of a rule on a particular “insured financial institution.” This would open the door for any institution engaging in practices that harm consumers to construct a specious financial stability defense against CFPB action.
This amendment would drastically weaken the CFPB’s ability to carry out its mission just six weeks away from the day that it opens its doors. As Elizabeth Warren says, “If [the CFPB is] going to be weak, we’d just as soon not have it at all.” A structurally weak agency would allow industry interests to pay lip service to consumer protection without making any meaningful changes to a financial system that sank the country into a painful recession. The CFPB is already subject to more oversight than any other financial regulator; the Moran amendment would simply make the agency less effective at protecting consumers, not make it more accountable.
Please call your Senators today and ask them to oppose the Moran Amendment #391 to the S. 782, the Economic Development Revitalization Act. You can find out your Senator’s phone number by calling the Senate Switchboard at (202) 224-3121. In addition, please ask them to oppose the DeMint Amendment #394, which would repeal the Dodd-Frank Act entirely. People and communities hard hit by the ongoing foreclosure and economic crisis need a financial system that has their interests in mind.