The senior Republican member of the Senate Committee on Banking, Housing and Urban Affairs has warned that there will be no confirmation on any director for the Consumer Financial Protection Bureau (CFPB) until President Obama agrees to make the bureau ‘accountable to the American people.’
In an op-ed column published in USA Today, Sen. Richard Shelby, R-Ala. (pictured top), argued that the CFPB was ‘designed to be unaccountable to Congress’ and that having the bureau run by a single director would be a recipe for disaster.
‘Its vast powers are vested in a single director who cannot be dismissed by the president for terrible policy decisions,’ Shelby wrote. ‘During his five-year term, the director can determine not only how the bureau spends its more than a half-billion-dollar budget, but also how it regulates much of the American economy. Because the director will decide whether and how consumers can obtain credit, the economic lives of nearly every American will be touched by this new federal bureaucracy. A bureaucracy with that kind of power must be accountable to the American people.’
Shelby and the majority of Senate Republicans have insisted on an overhaul of the CFPB leadership design, with the office of director be replaced by a committee.
Separately, the U.S. Chamber of Commerce has argued that the absence of a CFPB does not mean that nonbank entities can escape regulatory oversight. In a blog posting on the chamber's website, Jess Sharp, executive director of the chamber's Center for Capital Markets Competitiveness (pictured bottom), argued that the Obama administration was being disingenuous in claiming that the CFPB must have a director in order to handle nonbank oversight.
‘The White House is attempting to pull off a semantic trick that implies that without a director in place, nonbank providers of financial products and services like debt collectors, payday lenders, credit bureaus, and providers of prepaid cards are operating in an unregulated 'free fire' zone,’ Sharp wrote. ‘Not true, of course. Not even close.’
Walsh added that while the CFPB would be unable to ‘supervise’ nonbanks without having a director, it did not mean that nonbanks were in the clear because the Federal Trade Commission and state regulators had the authority to institute enforcement actions against these institutions.