Letter follows introduction of bill to ensure CFPB is both effective and accountable
May 05 2011
WASHINGTON, D.C. – U.S. Senator Jerry Moran (R-Kan.), along with 43 Senate colleagues, today notified President Obama that he will not confirm any nominee – regardless of party affiliation – to be the Director of the new Consumer Financial Protection Bureau (CFPB) absent structural changes that will make the Bureau accountable to the American people. Under the Dodd-Frank financial regulation Act, the Director is given unfettered authority to regulate businesses that extend consumer credit. Although the Director will also have hundreds of millions of dollars of public money at his or her disposal, no checks and balances are provided on how it is spent. In light of these facts, the Senators sent today’s letter out of concern that such unchecked authority could be used for political purposes at the expense of access to credit, job creation, economic growth, and financial stability.
In the letter, the Senators call for three specific, commonsense reforms to the Bureau’s structure:
- Replace the single Director with a board to oversee the Bureau. This would prevent a single person from dominating the Bureau and provide a critical check on the Bureau’s authority.
- Subject the Bureau to the Congressional appropriations process. This would provide oversight and accountability to the American people on how public money is spent.
- Establish a safety-and-soundness check for the prudential financial regulators, who oversee the safety and soundness of financial institutions. This would help ensure that excessive regulations do not needlessly cause bank failures.
President Obama signed the Dodd-Frank Act into law on July 21, 2010. Although Democrats heralded the Bureau as the centerpiece of their legislation, the President has yet to nominate a Director.
Republican Leader Mitch McConnell (R-Ken.), a lead signatory on the letter made the following statement: “The CFPB as created by the deeply-flawed Dodd-Frank Act is set to be one of the least accountable and most powerful agencies in Washington. Today’s letter delivers a commitment by 44 Republican Senators to fix the poorly-thought structure of this agency that will have unprecedented reach and control over individual consumer decisions – but an unprecedented lack of oversight and accountability. The reforms outlined are necessary before we will consider any nominee to head this agency.”
Senator Richard Shelby (R-Ala.), Ranking Republican on the Committee on Banking, Housing and Urban Affairs and also a lead signatory on the letter, issued the following statement: “This is about accountability. The Bureau, as currently structured, lacks any semblance of the checks and balances inherent in the Constitution. Everyone supports consumer protection, but we should never entrust a single person with this much power and public money. We are simply asking the President to support common sense reforms that provide the accountability absent in the current structure.”
Senator Jerry Moran, who has filed legislation that would enact reforms contained in the letter, made the following remarks: “Allowing a single unelected bureaucrat to define their own jurisdiction and regulate vast segments of our economy without accountability or restraint is a ‘reform’ that should be rejected. My commonsense legislation brings a variety of perspectives to the Bureau and gives Congress the oversight authority required for such a powerful agency. We stand ready to work with the president to make certain the CFPB is both effective and accountable.”
Senator Moran’s legislation, S. 737, the Responsible Consumer Financial Protection Regulations Act of 2011, would replace the single CFPB Director with a Senate-confirmed five-person commission – similar to the leadership structure of the Securities and Exchange Commission (SEC), Commodity Futures Trade Commission (CFTC) and Federal Trade Commission (FTC). It would also subject the CFPB to the regular appropriations process like most federal agencies. Senator Moran is a member of the Senate Committee on Banking, Housing and Urban Affairs.
Click here to see the full text of the letter.
Click here to view the full text of S. 737.
- CFPB - Letter to President Obama - (922.2 KBs)