Elizabeth Warren, special advisor to the Obama Administration responsible for setting up the Consumer Financial Protection Bureau (CFPB) warned that changes to the agency's structure would negatively impact the effectiveness of their regulatory goals.
Speaking as the Society of American Business Editors and Writers conference on Friday, she stated that efforts to bring the CFPB's funding under the Congressional appropriations process is simply a goal to politicize the CFPB's funding and weaken its ability to achieve its stated goals. Currently, the bureau is funded through the Federal Reserve under mandates by the Dodd-Frank Act and does not require Congressional approval. Under a federal budget agreement reached last week, a measure was included that would subject the CFPB to annual financial audits by Congress.
Warren held that the independent funding of the CFPB is a necessary component of protecting the bureau from undue influence by a powerful banking opposition, thereby keeping it more accountable to the American people.
She also pushed back against claims that the CFPB lacks proper oversight, pointing out that the bureau is subject to the administrative procedures act and judicial review to ensure that its actions remain within the constraints of their legislative authority.
"The consumer protection agency is the only bank regulator whose rules can be overruled by another group of agencies," she said. "We cannot interfere with other agencies' rulemaking efforts, but other agencies can veto our rules. This is another assurance that we can be held accountable for our actions."
At the same time, she argued that the goal of the bureau are to bring consumer protection powers under the coordination of a single regulator to avoid the problems that were created by consumer protection powers and regulations being scattered among various agencies. The goal is to avoid ineffective rules and poor oversight that helped fuel the financial crisis.
Responding to another proposed change that would change the single director leadership position of the CFPB to a five-member bipartisan commission, she indicated that such a move would hinder the effectiveness of the agency. Representative Spencer Bachus, who sponsored the bill said the change would actually serve to take partisan politics out of the bureau. "The truth is it is virtually unheard of for an independent agency to be governed by one single director," he said. "Almost all independent agencies are governed by a commission rather than a single person because commissions provide for greater checks and balances."
Stating the CFPB has the opportunity to make accountability its hallmark, Warren called on media members to help keep the bureau, and the entities it will regulate, accountable for their actions.
