Tweaks to laws governing the Consumer Financial Protection Bureau passed the House of Representatives by a vote divided almost strictly along party lines on Wednesday afternoon, though the margin of approval was not wide enough to override the veto President Obama vowed in response.
The CFPB Advisory Boards Act, which passed 235-183, would establish an advisory council for non-bank businesses, and additional advisory councils for credit unions and community banks within the Dodd-Frank institution.
More contentious, however, was an amendment attached to the legislation by House Financial Services Committee chair Jeb Hensarling (R-Texas) during the mark-up. The added language would limit the amount of money that the Federal Reserve can provide to the CFPB over the next decade.
The provision saw the bill quickly shed the bipartisan support it had gained in the House Financial Services Committee, where it previously passed by a wide margin, and elicited a veto threat from the president.
In a policy statement issued Tuesday, the Office of Management and Budget brushed off the advisory councils as “not necessary because the CFPB already conducts significant stakeholder outreach,” but stated that the White House “ strongly opposes” the Hensarling amendment.
“As the CFPB’s funding is already capped under law and only increased in line with increases in the Federal Government’s employment cost index, this lower cap is solely intended to impede the CFPB’s ability to carry out its mission of protecting consumers in the financial markets,” it noted.
House Financial Services Committee ranking member Maxine Waters (D-Calif.) described the provision as a “backdoor budget cut” and said it “sets a dangerous precedent.” A Democratic cosponsor of the initial bill, Rep. Denny Heck (D-Wash.) joined with his colleagues in bemoaning the alleged betrayal and voting against the final legislation.
A coalition of labor unions, public interest advocates and civil rights groups also came out against the final deal in a letter sent Monday to congresspeople.
“The added language transforms this bill into a significant attack on the Consumer Bureau by ‘paying for’ the additional requirements by placing a ceiling on the CFPB’s budget, effectively diminishing the resources available to the Bureau to do its job,” the letter noted, calling the new obligations and the budget rules a “Trojan Horse designed to limit the Consumer Bureau’s work.”
Only Reps. Henry Cuellar (D-Texas), Brad Ashford (D-Neb.), Collin Peterson (D-Minn.) and Kyrsten Sinema (D-Ariz.) spurned their Democratic colleagues in voting yes, while Reps. Walter Jones (R-N.C.), Justin Amash (R-Mich.), Thomas Massie (R-Ky.), Ken Buck (R-Colo.) and Mo Brooks (R-Ala.) crossed the aisle to side with Democrats in voting no.
Rep. Robert Pettinger (R-N.C.), the original sponsor of the bill, claimed that Democrats were putting up a front in bad faith, and said the legislation would only reduce the CFPB budget cap by 0.1 percent.
But Democrats are concerned that Republicans have been using a range of procedural tactics to weaken post-collapse financial regulations whenever they can—most notably, in December, when conservatives successfully used must-pass budget legislation to attach legislation that has allowed banks to trade derivatives with publicly-backed retail deposits.
Liberals tried to delay the CFPB Advisory Boards Act through a motion for the Financial Services Committee to reconsider it with an amendment, proposed by Rep. Ann McLane Kuster (D-N.H.) that, would have stopped “persons employed by companies engaged in predatory practices related to servicemembers” from participating on CFPB advisory councils. It failed by a 184-234 vote, with only Reps. Jones and John Duncan (R-Tenn.) joining Democrats’ support for the measure.
In making the case against Kuster’s amendment, Hensarling said that the bill should be as narrow as possible, and did little to allay Democrats’ concerns about his colleagues views on financial regulation. From the floor of the House, the key committee leader likened the consumer watchdog to some kind of murky Cold War-era institution or Red Scare law enforcement agency, calling it “the single most powerful and unaccountable agency in the history of federal government.”
