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New Consumer Agency Under Attack: “This Is About Cops on the Beat,” Warren Says

Aaron Task
Editor in Chief
Fin - Daily Ticker - US

The Consumer Financial Protection Bureau doesn't officially open for business until July 21, but its opponents have already launched some preemptive strikes.

Amid the budget wrangling in Washington, House Republicans have proposed capping the CFPB's budget at $80 million this year vs. the $143 million requested. Separately, legislation has been proposed to move the bureau into Treasury, which would give Congress greater oversight of its operations.

"Let's face it...the whole notion behind [this] is to try to make this agency weaker," says Elizabeth Warren, who President Obama tasked with setting up the agency. "I don't get why you want to do that to consumers."

On Wednesday, the House Financial Services committee is schedule to hold a hearing on the CFPB, where these and related matters are certain to be discussed. Citing the bureau's "extremely broad rulemaking authority," the Chamber of Commerce sent a letter to Treasury Secretary Tim Geithner ahead of the House hearing requesting no rules be made by the CFPB until the White House nominates a director who is then confirmed by Congress.

In September, President Obama put Warren in charge of setting up the CFPB, an agency she helped champion. The President did not formally nominate her to run the agency, thus avoiding a potentially nasty Senate hearing - and possible rejection. (Whether that was an act of political shrewdness or cowardice is a matter of opinion and a discussion for another day.)

Cops on the Beat

I recently caught up with Warren in Washington, D.C. where she displayed her typical stoicism and directness when asked about the politics surrounding the agency.

What's at stake, Warren says, is the funding needed to put "cops on the beat" to enforce the consumer protection laws already on the books, much-less those proposed by the bureau. "If we had has this consumer agency just four years ago," many of the worst abuses in mortgage lending could have been "pinched off," she says.

The CFPB is currently set up to be funded via the Federal Reserve, with the funding to come from fees paid by banks and the Fed's sale of Treasuries. In other words, the bureau won't add to the national deficit or get its funding through the political process, Warren notes.

"That works for all the other bank regulators but at least some people are saying 'let's take the one [regulator] who stands up for consumers and we're going to put them back into the political process and let the lobbyists come in every year and beat them around the head and shoulders in order to try and take away the money,'" she says.