Sen. Richard Shelby
No surprise to anyone since he's said it before, but Richard Shelby asserts that the nomination of Richard Cordray to head up the Consumer Financial Protection Board is "dead on arrival." Unless, that is, President Obama gives in to Republican demands to restructure the bureau into a watchdog with neither bark nor bite.
In a Wall Street Journal op-ed published today (available to subscribers only), amid blaming Fannie Mae and Freddie Mac for the housing crisis, the Alabama senator (who is the ranking member on the Banking, Housing and Urban Affairs committee) rejected accusations that proposals Republicans have made to change the bureau are an effort to eviscerate it.
That's not how consumer groups see it for the obvious reason that the GOP has been trying to gut the CFPB since failing to strangle it in its crib after failing to ensure it was stillborn. What could be more rancid than Shelby posturing as an advocate for consumer rights against a "concentration of power [that will be] abused or misused to the detriment of American businesses and consumers"?
This is the guy, you may recall, who just four months ago labeled as a "regulatory shakedown" the settlement proposal sought by state attorneys general to get mortgage lenders to provide modest restitution for their larcenous abuses of American borrowers and credit card holders. There is a concentration of abusive power he's concerned about all right. The one that has him firmly wedged in its back pocket and another part of its back side.
All Obama has to do to get Shelby's vote for Cordray is to curtail his clout on the CFPB by setting up a five-member panel over the director, give Congress control over its finances and give banking agencies that were snoring up a storm during the run-up to the financial crisis veto power over new regulations.
Such changes have been advocated for months, and when they came up in a House committee hearing in May, the response from consumer advocates was swift and to the point:
"It's critical for the CFPB to be led by a single director," says Pamela Banks, Senior Policy Counsel for our sponsors at Consumers Union. "We can't afford to hamstring the CFPB with an unnecessarily complicated bureaucratic structure. Replacing the CFPB's director with a commission would slow down its decision making process and make it more prone to internal discord." […]
"Congress should reject efforts to turn this new consumer watchdog into a lapdog," said Banks. "The Consumer Financial Protection Bureau hasn't even opened its doors yet and opponents of reform in Congress are already trying to weaken it. Lawmakers should oppose efforts to undercut the CFPB and stand up for consumers who deserve a fair deal on their credit cards, mortgages and bank accounts."
We know full well what congressional control over the CFPB budget would mean because Republicans were already at work back in February seeking to cut what the bureau would spend this year from $143 million to $80 million. That works out to the compensation packages for about five of the country's top banking CEOs. The bureau's funding is set under the Dodd-Frank legislation that established it to consume as much as 12 percent of the Federal Reserve's annual budget when it is fully up and running. That would be about $500 million a year.
Rather a small price to pay if the CFPB does what it has been designed to do and has an aggressive chief in place to guide it, especially in its important first years. Which is exactly what Shelby and his cohorts want to stop. The very existence of the CFPB is an affront to Republicans, none of whom voted to approve it in the first place and most of whom are determined to mount a rearguard action to ensure regulatory capture and hamstring the bureau from the get-go.
You've got to give them credit for relentlessness. They never stop trying to turn their defeats into victories.