U.S. Senator Richard Shelby, ranking Republican on the Senate Committee on Banking, Housing and Urban Affairs, today made the following statement at a Committee hearing on consumer protection in the wake of the financial crisis.
STATEMENT OF SENATOR RICHARD C. SHELBY
Committee on Banking, Housing and Urban Affairs
"Thank you, Mr. Chairman. Today's hearing provides the Committee a timely opportunity to examine one of the most serious flaws in the Dodd-Frank Act -- namely, the governance structure of the new Bureau of Consumer Financial Protection.
"The issue is whether the Bureau is sufficiently accountable to the American people. I and 43 of my colleagues believe that it is not. There is broad, bipartisan support for improving consumer protection. There has never been any disagreement on that point.
"There is disagreement, however, over the appropriate means by which we should make those improvements. The approach taken by the Dodd-Frank Act was to create a huge new and entirely unaccountable bureaucracy. This is a typical response by Washington to a crisis.
"What is new, however, is the unprecedented amount of autonomy the bureaucracy will have. We will hear testimony today on what can only be described as the unfettered power of the Director. Unlike every other financial regulator, the Director of the Bureau essentially answers to no one.
"This concentration of power violates our nation's basic democratic principles. Our national government was carefully crafted to diffuse authority and prevent one person from exercising power arbitrarily.
"In contrast, the Dodd-Frank Act built a wall around the Bureau with the express purpose of eliminating any real checks on the Director's authority. Supporters of Dodd-Frank said that they wanted to make the Bureau "independent.' What they did was make the Bureau unaccountable.
"They argued that the Bureau needed to be protected from political pressures. Yet, by making the Bureau completely autonomous, they removed any avenues for meaningful Congressional oversight. What makes the lack of accountability of the Bureau so troubling is that Congress, for all intents and purposes, delegated its own legislative power by giving the Bureau an enormous amount of policymaking and rule writing authority. At the same time, however, it also insulated it from the very body that created it and gave it its mandate. This was a mistake and it needs to be corrected.
"After nearly one year, the President has finally nominated someone to be the Director of this new bureaucracy. The Chairman has announced his intent to move quickly on this nomination. Given the fundamental flaws with the existing structure of the Bureau, however, the Senate should not confirm any person to lead the Bureau until some reasonable reforms are adopted.
"Those who are advocating for more accountability have been accused of trying to "gut', "cripple', or "defang' the Bureau. I believe that it is important to note, however, that we have not, and are not, proposing any changes to the Bureau's authority. We are proposing changes to the Bureau's structure so that it will be more accountable to the American people.
"The creation of the Bureau was largely a partisan effort. We now have an opportunity to make some changes with strong bipartisan support. We all agree that consumer protection needs to be improved. We should also be able to agree that the structure of our financial regulators should comport with our democratic values. Therefore, I see no reason why we can not work together to make the Bureau a strong consumer advocate as well as a fully accountable government agency.
"Thank you, Mr. Chairman."