Who's Afraid of Elizabeth Warren?
The attacks on Elizabeth Warren and the Consumer Financial Protection Bureau (CFPB) just keep coming, fast and furious, facts be damned.
The CFPB will be “powerful, hard-nosed and unaccountable,” warns Fred Barnes, executive editor of The Weekly Standard. The agency “will decide its own budget,” its “rulings can’t be vetoed,” and it “will be almost impossible to challenge” in court.
“Who in the world would consider it appropriate to have one person appointed to set the rules for the entire financial industry?” wonders Senator Bob Corker.
The Wall Street Journal describes Warren’s “ideological agenda that banks are the villains of the credit crisis while distributing cash to homeowners who will presumably be grateful on Election Day 2012.”
And the latest? A proposed $20 billion settlement with the Big Banks for foreclosure fraud and abuse is deemed by bank executives as “a naked shakedown” by the CFPB.
(Never mind that banks have illegally foreclosed on some homeowners, and imposed unwarranted fines on others, to name just a couple categories of violations.)
Clearly, what we have here is a scene straight out of South Park: a Godzilla-like CFPB with the face of Elizabeth Warren on a rampage. Upstanding citizens must either run for their lives or join the GOP, Wall Street, and conservative Democrats to bring this monster to its knees—just as these defenders of deregulation brought our economy to its knees.
Don’t let this concerted rightwing smear campaign—straight out of their stale playbook—distract from the facts. These daily hit-jobs on Warren and the CFPB are designed to do one thing only: lay the groundwork to limit the agency’s funding and autonomy and, consequently, its power.
Currently, the bureau is funded through the Fed—just as all bank supervisory agencies are independently funded—in order to avoid politicizing its mission by subjecting it to Congressional appropriations. Yet the GOP would like to create a different set of rules for the CFPB. That’s why Texas Republican Representative Randy Neugebauer has introduced legislation to house the CFPB in Treasury so that Congress can control the purse strings. He didn't try to hid his objective, saying the move would allow Congress to “have some say-so on how big this organization gets and some of their activities.”
Warren addressed this issue squarely in a recent speech, “While the banking regulators charged with preserving the safety and soundness of financial institutions and ensuring consumer protection compliance by smaller banks would continue to receive independent funding, the agency in the financial regulatory system with lead responsibility for protecting consumers would face a different set of rules – rules that threaten its independence.”
It’s also a downright fabrication when people like Barnes and Corker paint a picture of a completely unaccountable CFPB.
Under the Dodd-Frank Act there are ample opportunities for Congress to do its oversight job: like when the CFPB Director testifies twice a year to Congress; or when the agency submits quarterly financial reports to the Office of Management and Budget, and reports annually to Congress on its budget and operating plans; and when the Government Accountability Office does its annual audit.
As for the Director’s power “to set the rules for the entire financial industry”—aside from that being a ridiculous statement on the face of it—the Financial Stability Oversight Council will be able to review CFPB regs, and the Administrative Procedures Act allows for federal courts to review agency decisions as well. The courts are also empowered to ensure that the CFPB—like any agency—is acting within its Congressional mandate. Finally, when all else fails, Big Business’ Congressional cronies can attempt to get whichever regulations they find objectionable repealed by their colleagues.
What is most striking and infuriating about these cynical and calculated attacks against the CFPB and Warren is this: until now, too many federal agencies were charged with consumer financial protection, and that obligation usually received short shrift, lost amidst competing interests and responsibilities. We’ve seen the disastrous results—not only for consumers, but businesses competing honestly against competitors who make their products seem more enticing by burying the true costs in intentionally confusing contracts and legalese.
As Warren put it in a recent letter to Chairman Shelley Moore Capito and Ranking Member Carolyn Maloney of the House Subcommittee on Financial Institutions and Consumer Credit: “Markets work only when people can see the prices and risks up front and can make apples-to-apples comparisons among products. We want consumers to have the information they need—upfront, not buried in the fine print…. This is a market that will allow small businesses to compete.”
Now that we finally have a bureau tasked with protecting the interests of consumers and those good businesses which desire market transparency, let's make sure that the CFPB is able to do its job. One important way to make that happen is for people to stay engaged, opposing politicians who do the bidding of well-funded lobbyists, and challenging those in the media who give them a bully pulpit.
© 2011 The Nation