Republicans in the House of Representatives have come out with a budget proposal that, while vague on many points, is all too specific in its attack on Wall Street regulation, the Dodd-Frank Act, and the work of the Consumer Financial Protection Bureau.
The proposal would tie financial (and other) regulators up in procedural knots by requiring them to conduct multiple additional studies before new rules to protect the public interest could be adopted. In addition, it would eliminate a key mechanism for the safe unwinding of a big bank in the event of failure; undermine the ability of regulators to detect and curb systemically dangerous practices; and end the independent funding of the Consumer Financial Protection Bureau (CFPB) – undermining the effectiveness of the agency created to bring basic standards of transparency and fairness to the banking and lending markets and putting the financial interests it was created to regulate in a position to starve it of the funds needed to do its job.
Like other bank regulators, the CFPB is currently funded in a way that insulates it from financial-industry pressure. Under the House Republicans’ proposal, the agency would become dependent on annual congressional appropriations – a “reform” long sought by Wall Street interests who opposed the Bureau’s creation and know they could count on friendly lawmakers to use the power of the purse to keep the Bureau in line.
This is a budget proposal that ignores public opinion as well as history. Voters who have formed an impression of the Consumer Bureau rated it positively by a 4-1 margin in a national survey conducted last summer by Lake Research on behalf of the Center for Responsible Lending and Americans for Financial Reform: 85% of Democrats, 75% of Independents, and 63% of Republicans expressed a favorable view of the agency after hearing a description of its purpose.
The Budget Committee, the House, the Senate, and the Administration must say a very firm no to the thinly disguised Wall Street giveaways of this budget proposal.