AFR in the News: Financial Watchdog Braces for Election

The Consumer Financial Protection Bureau won’t be on the ballot next month. Just the same, its continued vitality, if not its very existence, could turn out to rest on the election outcome, according to Janna Herron of Fox Business.

“The bureau has quickly become the industry’s policeman, ordering credit card companies to pay hundreds of millions of dollars in consumer refunds and fines,” Herron writes. “Whether it maintains this status depends entirely on who’s in the White House next year.” One of Mitt Romney’s top economic advisors, Glenn Hubbard of Columbia Business School, told the Wall Street Journal in May that Romney, if elected, would seek to dismantle the CFPB and turn its powers over to other financial regulators. At the very least, Herron paraphrases Hubbard as saying, “Romney would move the agency outside the Federal Reserve and make it dependent on Congress for funding.”

“In March,” Herron points out, “[House] Republicans… led by Paul Ryan, budget committee chairman and current GOP vice-presidential hopeful, proposed to slash the CFPB’s 2013 funding by more than half.” Republicans legislators and conservative pundits and scholars  have been harshly critical of the CFPB, Herron observes. As one exmaple, she cites Todd Zywicki, Foundation Professor of law at George Mason University. Testifying before Congress in March Zywicki described the bureau as “a monster of an agency that is going to reduce access to credit, increase the cost of credit, and ironically, have the unintended consequence of probably exposing more consumers to fraud and abuse when it comes to lending products.”

At the same time, Herron says, “[t]here is a camp that believes the CFPB could survive a Romney administration, mostly because he has other, larger priorities. So far, the campaign has revolved around the hot-button issues of balancing the budget and Obama’s health care reform.

“And,” she adds, “there’s this salient stat: Two-thirds of likely voters believe the CFPB is needed” according to a July poll commissioned by Americans for Financial Reform along with the Center for Responsible Lending, the National Council of La Raza, and AARP.