Consumer Finance Protection Agency Struggle Continues

May 27, 2011

For anyone who hasn't been closely following the debate over the new Consumer Finance Protection Bureau, NPR's Tamara Keith provided a useful review on Friday's Morning Edition of where things stand.

The long and short of it is that the Obama Administration on one side and congressional Republicans and the financial industry on the other remain locked in disagreement over the new regulator's authorities and structure as well as how much independence it should have from Congress.

The symbol of the partisan standoff remains Elizabeth Warren, the unflappable, plain-talking Harvard University law professor who is overseeing the creation of the agency which is due to open its doors July 21.

She probably would be its first director if she could get confirmed, which she probably can't because of all the fear and loathing of her on Capitol Hill and in the financial industry.

The ill will is apparently mutual. At a House hearing earlier in the week, Warren and Republicans had many testy moments, with GOP members accusing her of dishonesty and Warren apparently giving as good as she got.

If some Democrats have their way Warren, who is very popular with many Democrats, could become even more of a problem for Republicans.

The New York Times reported earlier in the week that she is being recruited to run for the Senate seat from Massachusetts currently occupied by Republican Sen. Scott Brown.

One Republican complaint is that because the new agency would be funded by fees paid by the institutions it regulates, Congress wouldn't be able to exert the power of the purse over the agency.

Independence from complete congressional influence was exactly the reason why the Dodd-Frank legislation created that funding arrangement for the new agency. The Federal Insurance Deposit Corp. is also funded by fees from the institutions it regulates.

Likewise, the Federal Reserve is funded not from congressional appropriations but the money it makes trading U.S. Treasuries, for instance.

Of course, the Fed's independence has been a sore spot for some congressional Republicans, too, who feel that makes it unaccountable.

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