Warren: Despite critics’ claims, CFPB not too powerful

{mosads}Her comments, to be delivered at a subcommittee hearing devoted to oversight of the CFPB, represent some of her most direct rebuttals to criticisms of the fledgling bureau, set to begin work in July. It also comes as Republicans are ramping up their efforts to alter and limit the agency.

In the House, the GOP is pushing several bills that would make major changes to the agency, while in the Senate, Republicans are vowing to block the confirmation nominee to become the bureau’s first director unless changes are made.

Republicans have long warned that the CFPB will enjoy outsized power in its efforts to regulate consumer financial products, and want to curb its influence. In that effort, they are pushing for a number of changes, including replacing the director position with a bipartisan commission, bringing its budget under the control of congressional appropriators, and making it easier for other regulators to overrule CFPB regulations.

But Warren maintains in her testimony that the CFPB’s power is “carefully limited,” and dismisses those proposed changes as attempts to “undermine the consumer agency before it even begins its work of protecting American families.”

She will note that “huge sectors” of consumer finance fall outside its reach, and instead are left to state and local regulators. In addition, she will list a number of other ways the CFPB’s power is brought in check, including annual audits by the Government Accountability Office and biannual testimony before Congress on the CFPB’s work and its budget.

And beyond those “formal restraints,” Warren will caution that “informal restraint” from Wall Street will also prevent the CFPB from having excessive power.

“The financial services industry has substantial resources to ensure that its views about the CFPB and its work are well known and fully considered,” she will say, according to the testimony.

Republicans and business groups have long argued that the CFPB, created by the Dodd-Frank financial reform law, is too powerful. House Financial Services Chairman Spencer Bachus (R-Ala.) has called it “the most powerful agency ever created,” and Thomas Donohue, head of the U.S. Chamber of Commerce, has described it as “the most powerful regulatory agency that’s ever been put together.”

Warren cited both of those comments — without identifying the speakers — in her testimony as evidence of “baseless claims.”

The president has yet to nominate a person to be the first director of the CFPB, but a campaign is growing among consumer advocates and some House Democrats to have him name Warren to the spot, circumventing the confirmation process with a recess appointment if need be.