May 16, 2010

United States Senate
Washington, DC 20510

Dear Senator:

We write on behalf of Americans for Financial Reform, an unprecedented coalition of over 250 national, state and local groups who have come together to reform the financial industry.  Members of our coalition include consumer, civil rights, investor, retiree, community, labor, religious and business groups as well as Nobel Prize-winning economists.  We support a strong Consumer Financial Protection Bureau (CFPB) and oppose weakening amendments to the Restoring American Financial Stability Act, S. 3217.

We urge you to oppose amendment #4010 from Senator Shelby because it would starve the CFPB for resources over time and expose its budget every year to heavy political pressure by large banks. The amendment would dangerously alter the method by which the CFPB is funded. Under S. 3217, the Federal Reserve is required to transfer to the CFPB a portion of the funds it collects from many diverse sources.  The Shelby amendment, by contrast, eliminates Federal Reserve transfers and funds the CFPB solely through assessments on financial institutions with more than $50 billion in assets.  By narrowing the funding source for the CFPB budget to huge, politically influential banks, this amendment would dramatically politicize the budget process, virtually guaranteeing that large banks will vigorously attempt to reduce the CFPB’s budget on a regular basis.

Moreover, the Shelby amendment fails to adjust the CFPB for inflation, as S. 3217 does.  Beginning in fiscal year 2013, the funding benchmark for the agency would be fixed at 12 percent of the 2006 operating expenses of the Federal Reserve System, resulting in a net yearly reduction in the operating budget of the CFPB.  This will severely hamper the ability of the CFPB to do its job for the American public.

In short, Shelby #4010 would weaken the CFPB, expose it to extreme political pressure to soften its regulatory approach and take away the funding necessary to carry out its duties.  We urge you to OPPOSE.

Sincerely,

Americans for Financial Reform

View the list of AFR Partners here.

All the organizations support the overall principles of AFR and are working for an accountable, fair and secure financial system. Not all of these organizations work on all of the issues covered by the coalition or have signed on to every statement.