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Shackling the Cop on the Beat

Huffington Post
By Preeti Vissa

While attention in Washington, D.C. has understandably been focused on the fight over the budget and a possible government shutdown, forces who want to return to the laissez-faire policies that brought about the financial meltdown and Great Recession have been waging a quiet war against protection for consumers of financial services. Disturbingly, there are indications that they’re gaining ground.

The time to start fighting back — and for President Obama to start firmly and forcefully defending one of his administration’s most important accomplishments — is now.

Opponents of financial regulation have zeroed in on one of the best, most important provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the section that created a new Consumer Financial Protection Bureau. This bureau, now being set up under the direction of White House aide Professor Elizabeth Warren, is designed to be a “cop on the beat,” making sure that the sort of rip-offs and predatory practices that hurt millions of consumers and tanked the economy don’t happen again.

CFPB’s opponents, championed by a group of Republicans in the House and Senate, have tried to portray the new bureau as a rogue agency with way too much power. For example, Sen. Jerry Moran (R-Kan.), author of one Senate bill to restrict the bureau, said recently, “The CFPB has more power and authority than almost any independent agency in history,” and needs to be reined in. That’s nonsense, but word on Capitol Hill is that such arguments are starting to gain traction.

Moran’s bill, which has a matching counterpart in the House, would have the CFPB run by a 5-member commission rather than a single director. On the surface, that sounds innocuous enough, and supporters point to other federal regulatory agencies such as the Securities and Exchange Commission and Federal Communications Commission which have similar structures. It’s clever marketing, but deceptive.

The one result that running a regulatory agency by committee can guarantee is that it will be slower and less efficient. And the SEC and FCC, while they’ve done some useful work, are not exactly known as fearless, energetic protectors of the public. CFPB is supposed to be a cop on the beat, and there’s a reason beat cops don’t work by committee.

The FCC, for example, has for the most part rolled over in the face of large-scale media consolidation and mergers among broadcast giants. My colleagues at The Greenlining Institute saw this first-hand when they advocated for provisions aimed at preserving at least a bit of media diversity in the recently-approved Comcast/NBC Universal merger. A couple commission members were responsive to public concerns, but others not so much. It’s almost always a struggle.

And that is precisely what CFPB’s opponents want.

Let’s be clear: The claims being made by anti-consumer forces are trumped-up nonsense. Not only is CFPB not unusually powerful as regulatory agencies go, it has restraints on it that no other agency has — the result of congressional compromises needed to get the law passed.

In addition to being subject to normal congressional oversight, CFPB — unlike any other bank regulator — can have its decisions overruled under some circumstances by a committee of the other regulators, called the Financial Stability Oversight Council. And its budget is capped, while budgets of other bank regulators are not. There is simply no real justification for the pending set of bills that would restrict the new bureau in additional ways or delay its opening, except to give the speculators and predators free rein to continue to profit on the misery of ordinary consumers.

By and large, the public gets it. But so far the anti-regulatory voices, backed by the full weight of conservative think-tanks like the Heritage Foundation, have been the most vocal in the political dialogue. That needs to change, and quickly, before efforts to strangle CFPB in its crib gain too much strength.

That means that we as advocates and concerned citizens have to speak up loudly and forcefully. So does President Obama, who has been disturbingly quiet (and yes, I’m well aware that the president has a few other things on his plate right now, but if ever there was a moment for multitasking, this is it).

Lots of folks worried that the Dodd-Frank Act wasn’t strong enough, and some of those worries were justified. But the best part of the law is now in danger. If we don’t want to see another crash like the one that drove our economy into the ditch, the time to stand up for it is now.


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