Consumer Bureau Is a Political Football in Both Party Platforms

Five years after it was stood up as a response to the 2008 financial meltdown, the Consumer Financial Protection Bureau can boast its status this month as one of the few agencies specifically mentioned in both of the national political party platforms.

Most Republican lawmakers haven’t given up on oft-stated plans to abolish, or at least increase congressional oversight of, the government’s newest and perhaps most active regulatory agency—whose budget comes not from appropriations but from the Federal Reserve under the 2010 Dodd-Frank Financial Reform Act.

Hence, in a platform packed with contempt for unelected and “overpaid bureaucrats” now actively monitoring abuses in the mortgage, student loan, credit card and payday loan industries, the Republicans in Cleveland last week approved a text containing the following:

The worst of Dodd-Frank is the Consumer Financial Protection Bureau, deliberately designed to be a rogue agency. It answers to neither Congress nor the executive, has its own guaranteed funding outside the appropriations process, and uses its slush fund to steer settlements to politically favored groups. Its director has dictatorial powers unique in the American Republic. Its regulatory harassment of local and regional banks, the source of most home mortgages and small business loans, advantages big banks and makes it harder for Americans to buy a home. Its one-size-fits-all approach to every issue threatens the diversity of the country’s financial system and would leave us with just a few enormous institutions, as in many European countries.

If the bureau cannot be not abolished, it should at least be subjected to the appropriations process, the Republicans argued. “In that way, consumer protection in the financial markets can be advanced through measures that are both effective and constitutional,” the platform stated. “Any settlements arising from statutory violations by financial institutions must be used to make whole the harmed consumers, with any remaining proceeds given to the general Treasury. Diversion of settlement funds to politically-connected parties should be a criminal offense.”

A differing view of the CFBP emerged from the Democrats, who are expected on Monday night in Philadelphia to vote on the draft approved July 21 by the party’s platform committee.

We will …vigorously implement, enforce, and build on President Obama’s landmark Dodd-Frank financial reform law, and we will stop dead in its tracks every Republican effort to weaken it. We will stop Republican efforts to hamstring our regulators through budget cuts, and we will ensure they have the resources and independence to fully enforce the law and hold both individuals and corporations accountable when they break the rules. We will also continue to protect consumers and defend the CFPB from Republican attacks. We oppose any efforts to change the CFPB’s structure from a single director to a partisan, gridlocked commission and likewise oppose any efforts to remove the bureau’s independent funding and subject it to the appropriations process.

Democrats will also continue to support the CFPB in enforcing foundational civil rights laws protecting against discrimination in consumer lending. Democrats condemn predatory payday lending, and will protect consumers by defending the CFPB and implementing strong new regulations.

CFPB spokesman Sam Gilford declined Government Executive’s request for a comment.