Consumer Financial Protection Safety and Soundness Improvement Act of 2011

BREAK IN TRANSCRIPT

Mr. BLUMENAUER. Mr. Chair, I strongly oppose H.R. 1315, the Consumer Financial Protection Safety and Soundness Improvement Act of 2011. This bill is merely the latest attempt by my Republican colleagues to undermine American families and consumers, joining a distressing series of efforts including stripping health insurance from children, ending Medicare, and removing protections for clean air and clean water. Congress has been in session for nearly 200 days this year and Republicans have so far failed to enact any legislation that would create jobs in America.

A year ago today, I rose in support of the Dodd-Frank Wall Street Reform and Consumer Protection Act, to end taxpayer bailouts of big banks, to improve consumer protections, and to strengthen the rules governing the financial sector. Among the most important of these protections was the creation of the Consumer Financial Protection Bureau (CFPB), whose purpose is to protect consumers from the worst abuses of the financial industry. Today, on the one year anniversary of its enactment, my Republican colleagues are trying to defang this critical agency, putting the economy at risk of the very same practices that caused the financial crisis.

Under the Dodd-Frank Act, the CFPB is led by an independent director appointed by the President and confirmed by the Senate. It will write rules for consumer protections governing all financial institutions--banks and non-banks--offering consumer financial services or products and oversee the enforcement of federal laws intended to ensure the fair, equitable, and nondiscriminatory access to credit for individuals and communities. The CFPB will unify responsibilities that, prior to its creation, were spread across seven different government entities, providing consumers with an accountable and powerful advocate.

H.R. 1315 seriously weakens the CFPB and the protections it provides for our families. Some of my specific concerns include:

The legislation requires a director be in place before the CFPB can take any action. With Republican Senators committed to filibustering any nominee to head the new agency, this requirement effectively stops any action the CFPB might take, putting the financial security of families at risk;

The legislation seems motivated by a desire to deny the history of regulatory failure that contributed to the financial crisis, granting these same regulators the power to block CFPB rules; and

H.R. 1315 compromises the independence of the CFPB by expanding the Financial Stability Oversight Council's authority to set aside CFPB rules and regulations, significantly impeding the agency's ability to protect American consumers.

Professor Elizabeth Warren famously remarked that it is, ``impossible to buy a toaster that has a one-in-five chance of bursting into flames and burning down your house. But it is possible to refinance an existing home with a mortgage that has the same one-in-five chance of putting the family out on the street.'' H.R. 1315 badly undermines consumer protections and allows financial services companies to continue engaging in the abusive practices that put millions of families on the street and threatened the global financial system.

H.R. 1315 is deeply misguided, repudiating important protections for consumers, and I urge my colleagues in opposing this reckless bill.

Ms. HIRONO. Mr. Chair, I rise in opposition to H.R. 1315, the Consumer Financial Protection Safety and Soundness Improvement Act of 2011.

Today is the first anniversary of the Dodd-Frank Wall Street Reform and Consumer Protection Act. It is also the first official day of work for the Consumer Financial Protection Bureau (CFPB).

For the first time, the United States will have a financial regulator whose sole purpose is to protect consumers. From now on, there will be a cop on the beat watching out for predatory lending practices and unfair fees. Scam artists taking advantage of seniors, young people, and our men and women in uniform will be stopped. And, it will prevent honest businesses from having to compete with unscrupulous ones.

It will help consumers across the country get a fair deal.

I recently spoke with a young man in Hawaii who this agency's work would have helped. He was sold a $700,000 home at age 19. He
worked in construction and, at the time, business was booming. He was told by his lender that he qualified for the loan and that everything would be fine. He was inexperienced in purchasing real estate and trusted that the lender had his interests in mind. He was wrong. He no longer has that house, and today that young man's credit is so damaged that it will take him years to rebuild it.

This happened all over the country, and our economy is still reeling. But you wouldn't know that based on the legislation we are considering today. In fact, this bill seeks to limit the independence and effectiveness of the CFPB before it ever gets up and running.

First, it gives the Financial Stability Oversight Council (FSOC), which is primarily made up of the heads of the federal financial regulatory agencies, significant authority to block CFPB regulations. The FSOC's role is for the heads of these agencies to work together to identify and address serious risks to the whole economy--their primary responsibility is not consumer protection. This bill would reduce the threshold of votes required to overturn a CFPB rule from two-thirds to a simple majority and prevent the CFPB's director from voting.

Second, it replaces the single, independent CFPB director with a ``collegial'' commission. According to the Committee's report on this bill, such a structure is necessary for a better functioning agency. However, the Committee report fails to point out that the Securities and Exchange Commission, Federal Reserve Board, and other financial regulators are ``collegial'' commissions. Before the economic crisis these ``collegial'' bodies all had consumer protection responsibilities in their portfolios--but too often, those responsibilities fell to the bottom of the to-do list. The Federal Reserve was given the authority to regulate mortgages in 1994--but it took them 16 years to rein in risky loans.

Last, in a prime example of Washington double-speak the bill prevents the CFPB from taking over the consumer protection authorities of these other agencies until it has a Director. That is odd given that this very bill eliminates the Director position in favor of a commission.

Proponents of this measure say these changes are for the ``safety and soundness'' of the financial system. ``Safety and soundness'' in this case is really code for ``what's good for Wall Street's profitability is good for consumers.''

We all know that's not true.

Congress gave the CFPB sole responsibility for consumers so that other regulators will be able to focus on their primary jobs. The simple fact is that this bill would help reinstate regulatory gridlock and silence the voices of consumers--the opposite of what Dodd-Frank intended.

We have to remember that the cause of the crisis wasn't too much regulation--it was too little. I strongly oppose this legislation, and urge my colleagues to vote against it as well.

BREAK IN TRANSCRIPT

Source