On a bi-partisan vote of 241-173, the U.S. House of Representatives has approved HR 1315, the Consumer Financial Protection Safety and Soundness Improvement Act of 2011, a measure to bring accountability, transparency and oversight to the Consumer Financial Protection Bureau (CFPB). The Congressional action was taken the same day that the newly-formed CFPB was open for business. The legislation was moved to the floor by Rep. Spencer Bachus (R-AL), chairman of the House Financial Services Committee.
“No Federal bureaucracy should operate without accountability and effective checks and balances," said Rep. Bachus. "This bill brings needed structural reforms to ensure the CFPB is fair and effective in protecting consumers. As a result of the changes, the bill promotes robust consumer protection and certainty for our economy by ensuring the rules issued by the Bureau are consistent and do not endanger the safety and soundness of financial institutions.”
The Dodd-Frank Act, signed into law a year ago, established the CFPB as an independent bureau within the Federal Reserve. Under Dodd-Frank, the CFPB is run by a single director, the recently nominated Richard Cordray, who will guide the agency’s 1,000-plus government employees and who has the power to spend the CFPB's budget of hundreds of millions of dollars without any oversight. Cordray, if appointed, will also have the authority as CFPB head to decide which financial products and services will be available to American consumers. The CFPB director’s mandates can be overturned, but only in extremely limited and highly unlikely circumstances by a small group of fellow Presidential appointees—one of whom is the CFPB director.
The Consumer Financial Protection Safety and Soundness Improvement Act of 2011 was introduced by Rep. Sean Duffy (R-WI) and co-sponsored by Reps. Bachus and Shelley Moore Capito (R-WV), improves the structure of the CFPB by:
►Establishing a five-member, bi-partisan commission to manage the CFPB, a measure which Congressional Democrats previously supported;
►Creating a meaningful review process of rules promulgated by the CFPB that takes into consideration how a proposed rule could endanger the safety of consumers’ financial institutions; and
►Ensuring there is a Senate confirmed chair of the commission before the CFPB exercises its new regulatory authority.
“The House has taken an important step to help establish a job-friendly environment, protect consumers and turn this economy around," said co-sponsor of HR 1315, Rep. Duffy. "I thank Chairman Bachus and Congresswoman Capito for their help and strong leadership in ensuring the passage of this bill to increase government accountability and consumer protection.”