A bipartisan agreement on a five-year $300 billion transportation funding bill would allow banks to frivolously petition the Consumer Financial Protection Bureau for rural status.
The chance to be granted the distinction, which triggers exemptions from Dodd-Frank mortgage standards, would mostly serve to permit lobbyists “to coordinate application drives to inundate the agency with paperwork,” The Huffington Post reported Tuesday night.
Unlike many federal agencies, the CFPB is funded through the Federal Reserve System, and Congressional Republicans have thus tried to limit its resources by weighing it down with deferential obligations to industry actors.
One bill passed last year by the House Financial Services Committee, for example, would task the body with giving dozens of daily legal opinions to banks. The Congressional Budget Office said the mandate would eat up the equivalent of 14 percent of its 2015 budget annually over the next decade.
The rural application policy rider is among many provisions that have rendered the landmark infrastructure bill vulnerable to attacks from the left. The legislation also, as HuffPo noted, effectively granted post-2008 regulatory relief to a single financial institution: Emigrant Savings Bank.
“A single line slipped into the package will help the Manhattan-based lender dodge a rule from the 2010 Dodd-Frank financial reform law designed to prevent large and mid-sized banks from relying too heavily on borrowed cash,” the publication reported. “Emigrant is literally the only firm affected by the change.”
While the bill has been criticized by financial industry lobbyists for cutting Federal Reserve dividend payments to banks, the redirection of federal funds–from the banking sector to transportation–hasn’t been welcomed by all liberals. The Highway Trust Fund, what the money has been set aside for, is typically financed by a federal gas tax, which Republicans refuse to consider raising.
The levy, The New York Times noted, “was last increased in 1993 and is not indexed to inflation.” It is currently at 18.4 cents per gallon. Meanwhile, the Highway Trust Fund has been short $70 billion since 2008—a gap that has been filled on a piecemeal basis.
“This bill sets a terrible precedent,” said Sen. Tom Carper (D-Del.), in a statement noting his opposition to the deal. “It sets bad transportation policy that undermines the user-pays principle, which has been the bedrock of investment in our nation’s highway and transit systems for more than half a century.”
