This Week in the Consumer Financial Protection Bureau
The nomination of the director of the Consumer Financial Protection Bureau has turned into an existential question on the role of government in the private sector and drawn the sort of sharp words usually reserved for Medicare, immigration and social issues that are less, well, boring. This week has seen the most acrimonious debate yet.
Recap: restructuring and recess appointments
Senate Republicans lobbed the first grenade in a letter to President Obama threatening to hold up all of his Senate nominations unless the CFPB’s governing structure changes. When the president and Democrats floated the idea of a recess appointment to bypass Senate confirmation, Republicans responded with a constitutionally and logistically shaky plan to prevent the Senate from going into recess. This, in turn, spurred more Democrats to call for a recess appointment.
Three House bills would fundamentally change the bureau’s structure. The first, sponsored by Rep. Spencer Bachus (R-Alabama), would replace a one-person directorship with a five-person commission, each member of which must be confirmed by the Senate. Next, Rep. Sean Duffy (R-Wisconsin) put forth a bill allowing the Financial Oversight Stability Council, over which the banking industry has significant influence, to veto the CFPB’s regulations with a simple majority vote rather than a two-thirds majority. Finally, a bill from Rep. Shelly Moore Capito (R-West Virginia) would prevent the CFPB from having any true regulatory power until a director is in place. All three bills passed the House, but are not expected to advance except in a compromise deal with Obama.
This week: insults, apologies and “dark forces”
All the back-and-forth set the stage for this week, when de facto director Elizabeth Warren testified before the House, Treasury Secretary Tim Geithner spoke out, and a prominent banker publicly changed his position.
House hearing: On Tuesday, Elizabeth Warren testified before the House Oversight and Government Reform Committee chaired by Patrick McHenry (R-North Carolina) in what could accurately be described as a verbal boxing match. McHenry accused Warren of misleading Congress on her role at the bureau, saying, “I question the veracity of her former testimony in relation to the reality that we now see.” When asked if that meant Warren had lied, he replied, “Sure.”
A number of Democrats at the hearing apologized to Warren for the chairman’s behavior, and even more called for McHenry to apologize himself. Rep. John Yarmuth (D-Kentucky) told Warren, “The snarky comments about a Senate race, and the questioning of your veracity when there is documented evidence that you are being totally truthful indicates to me that this hearing is all about impugning you because people are afraid of you.”
Politico breakfast: At an event sponsored by online newspaper Politico, Treasury Secretary Tim Geithner said that the administration’s opponents wage a “war of attrition against the reform act…as a way to get leverage over the outcome.” He attributed the efforts to “mysterious forces,” and when asked to elaborate, said, “Dark forces, I would say.” Geithner stressed the administration’s resolve on the issue: “They’re trying to starve the agencies of funding so they can’t enforce protections for investors. We’re not going to let that happen.”
Oklahoma banker’s letter: The president and CEO of the Oklahoma Bankers Association, Roger Beverage, referred to Warren as the “Antichrist” in the not-so-distant past. However, in a letter to President Obama, Beverage voiced his support for Warren as the director of the CFPB. He had nothing but praise for Warren, and encouraged the president to make a recess appointment. “She’s gets both sides of the equation. She knows that you can’t have consumer financial services without community banks.”
The American Bankers Association remains neutral, saying, ““If Elizabeth Warren is ultimately confirmed by the Senate, then we support her leadership, and where she’s right, we’ll agree, and where she’s not right, we will disagree.”
The week in quotes
The week’s House hearing, combined with Geithner’s implication that Voldemort had it in for consumer protection, made for some memorable sound bytes.
“Pick somebody, whoever the hell it is — I suggest Ms. Warren — and let’s get on with it” – Roger Beverage, Oklahoma Bankers Association
Warren: “Congressman, you are causing problems. We had an agreement.”
McHenry: “You’re making this up. This is not the case.”
“I was shocked by Ms. Warren’s blatant sense of entitlement.” – McHenry
“I congratulate you for instilling such fear in the committee.” – Yarmuth (D-Kentucky)