House tries to shackle sway of new consumer agency

As the new Consumer Financial Protection Bureau officially opened its doors Thursday, the House was considering legislation that could restrict its authority to act against abuses of the financial system.

Republican sponsors of the bill say they are simply trying to promote transparency and accountability in the agency that was created a year ago as part of President Barack Obama’s overhaul of the rules governing financial markets.

But the White House has threatened to veto the legislation, saying it would expose consumers to the same risks that led to the 2008 financial meltdown. The Democratic-controlled Senate is unlikely to take it up.

“The Republican majority,” said Rep. Yvette Clarke, D-N.Y., at the opening of the debate, would like the American people to believe that a near-financial collapse never happened.”

The agency, created to shield consumers from mortgage, credit card, lending and other financial abuses, has become the focal point of continued GOP opposition to the financial overhaul law enacted last year.

Presidential adviser Elizabeth Warren, who has led efforts to get the agency operating, has faced several grillings before House hearings and all 47 Senate Republicans have said they will block confirmation of Warren or anyone else Obama nominates to be director of the agency unless Obama agrees to change its structure.

“Senate Republicans have been clear that the structure of the Bureau of Consumer Financial Protection needs to be properly reformed before we consider any nominee to lead it,” Sen. Richard Shelby of Alabama, top Republican on the Banking Committee, said Thursday.

Earlier this week Obama nominated Richard Cordray, the former Ohio attorney general who has been the bureau’s enforcement chief, to become director.

The bill would replace the agency’s director with a bipartisan five-member commission and withhold new authorities the agency is to receive until the Senate confirms the chair of that commission. It would make it easier for other financial regulators to block the agency from issuing regulations.

It states that the Financial Stability Oversight Council, which was also created under last year’s law to identify threats to the financial stability of the country and promote market discipline, must set aside any regulation put forth by the consumer protection bureau that is inconsistent with the safe and sound operations of U.S. financial institutions.