More On Legal & Compliancefrom The Advisor's Professional Library
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The House passed legislation late Thursday, H.R. 3193, the Consumer Financial Freedom and Washington Accountability Act, to place significant curbs on the Consumer Financial Protection Bureau — what the House Financial Services Committee chairman says is likely the “single most powerful and least accountable agency in Washington.”
The bill was sponsored by Rep. Sean Duffy, R-Wis., and passed by a 232-182 vote. It would not only replace the CFPB’s director with a bipartisan board, but it would also place the bureau’s employees — whose annual compensation averages $178,521, according to House Financial Services Committee Chairman Jeb Hensarling, R-Texas — on the civil service pay scale, and would require that the bureau be funded through congressional appropriations.
It’s unclear whether the bill has any support in the Senate.
“When it comes to our credit cards, our auto loans, our mortgages, the CFPB has unbridled, discretionary power not only to make them less available and more expensive, but to absolutely take them away,” said Hensarling in comments Thursday on the House floor.
Rep. Randy Neugebauer, R-Texas, added that he was worried about the CFPB’s current ability to draw money directly from the Federal Reserve.
“The CFPB has unusually broad regulatory authority that reaches across our economy,” he said. “But since it operates outside the normal budgeting process, it has almost no accountability to our taxpayers. That worries me.”
H.R. 3193 includes a series of bills passed by the Financial Services Committee, including H.R. 3519, the Bureau of Consumer Financial Protection Accountability and Transparency Act of 2013, authored by Neugebauer, which would subject CFPB to the appropriations process like other regulators.
But the House democratic opposition, led by Rep. Maxine Waters, D-Calif., ranking member of the House Financial Services Committee, condemned the legislation for making “drastic changes that weaken the bureau,” like eliminating the director, ending CFPB’s independent funding stream and making it easier for CFPB rulings to be overturned.
In a statement, Waters highlighted the CFPB’s “remarkable record of success in just over two years,” pointing to enforcement actions that have resulted in $3 billion being directly refunded to nearly 10 million consumers.
“Today’s vote is just the latest chapter in a relentless Republican attack on consumer protection," she said. "Since opening its doors in 2011, the CFPB has gone to bat for those who have been subject to the deceptive practices of unscrupulous financial institutions. And though it has been immensely successful, Republicans have tried to undercut it in every way possible.”
House GOP members are also balking at the CFPB’s “massive” collection of consumer data as well as its lavish revamp of its Washington headquarters.
“The CFPB will soon hold financial data of 10 million Americans — without their permission or knowledge,” Neugebauer said. “It’s as if they’re competing with NSA to see which agency can gather more information. Large-scale government data collection like this raises red flags about privacy and security.”
The bureau says it uses the information, which includes data on mortgages and credit card accounts, to "better understand consumers, financial services providers and consumer financial markets." The Dodd-Frank Act, which created the bureau, forbids it from gathering data to mine personally idenitfiable information.
Hensarling noted the $145 million that the CFPB is devoting to renovate a $150 million headquarter building “they don’t even own.” This renovation rate per square foot, he said, “is three times the average Washington, D.C. luxury, class-A renovation rate.”
The per-square-foot renovation cost of $483, Hensarling said, is “more money to renovate a building they don’t own than Dubai’s Burj Khalifa, the single-tallest skyscraper in the world. Now ironically enough, the architectural firm which designed the Burj Khalifa in Dubai is the same world-renowned architectural firm that the CFPB paid over $7 million to design their headquarter renovations.”
CFPB Director Richard Cordray has told the Senate that he would rather not renovate the building but the HVAC and other infrastructure need to be "brought up to snuff," Bloomberg reported.