Not So Safe, Not So Sound: Amodei, Heck and H.R. 3193

Occupy Wall Street bankersRepublicans have never liked the Consumer Financial Protection Bureau.  Nor have the members of the Republican Party in the House of Representatives stopped trying to find ways to gut the powers of the Bureau.  A voted taken on February 11, 2014 is an indication of that opposition.

H.Res. 475: “Providing for consideration of the bill (H.R. 3193) to amend the Consumer Financial Protection Act of 2010 to strengthen the review authority of the Financial Stability Oversight Council of regulations issued by the Bureau of Consumer Financial Protection, providing for proceedings from Feb. 13, 2014 – Feb. 24, 2014.” [rc 59] (223-193) Representative Joe Heck (R-NV) voting in favor of the bill; Representatives Dina Titus (D-NV) and Stephen Horsford (D-NV) voting in opposition.

And what would H.R. 3193 do?

(1) “Amends the Consumer Financial Protection Act to authorize the Chairperson of the Financial Stability Oversight Council to issue a stay of, or set aside, any regulation issued by the Consumer Financial Protection Bureau (CFPB) upon the affirmative vote of the majority of Council members (currently, two-thirds), excluding the Director of the Bureau.”

In short, any and all regulations issued by the CFPB could be “stayed,” or dismissed on the vote of only a simple majority of the FSOC.  Nothing like making it easier for the banking lobby to get pesky consumer protection rules set aside by reducing the number of votes on the FSOC from 2/3rds to a simple majority?

(2) “Requires the Council, upon the petition of a member agency of the Council, to set aside a final regulation prescribed by the CFPB if the Council decides that such regulation is inconsistent with the safe and sound operations of U.S. financial institutions. (Currently the Council is merely authorized, upon petition, to set aside a final regulation if it would put the safety and soundness of the U.S. banking system or the stability of the U.S. financial system at risk.)” (emphasis added)

Now we get to the meat of the matter. What is “safe and sound” and why is it not so safe and not so sound?  First and foremost — “safe and sound” is a shorthand term for PROFITABILITY.

In short, what the House Republicans are proposing is that any regulation issued by the Consumer Financial Protection Bureau which impinges on the PROFITABILITY of a lending institutions can be dismissed upon the “petition” (read ‘gripe’) of a member agency of the council — including the Comptroller of the Currency, an agency which did not exactly cover itself in glory during the time prior to the collapse of the financial markets in 2008.   But wait… H.R. 3193 is even a greater boon to the bankers.

(3) “Repeals: (1) the prohibition against Council set-aside of a regulation after expiration of a specified time period, and (2) mandatory dismissal of a petition if the Council has not issued a decision within such time period. Requires the CFPB Director, when prescribing a rule under federal consumer financial laws, to consider its impact upon the financial safety or soundness of an insured depository institution.”

There’s no time limit.  There’s no ‘statute of limitations’ after which the FSOC can declare a regulation made by the Consumer Financial Protection Bureau null and void?  Again, the old profitability test comes to the fore.

So, once more with feeling — Representative Joe Heck (R-NV) has voted in favor of a bill which would allow the banking sector to put the kibosh on any CFPB rule which might jeopardize the PROFITABILITY of a bank.   This, from a Representative of a state with the second highest foreclosure rate in the country — 1 in every 533 homes — where the national average is 1 in every 1,058. [LVRJ]  Not to mention the fact that the Nevada Attorney General just settled with Lender Processing Inc. over the ‘robo-signing’ mess created in our mortgage market. [News4]

Nothing says “I love you” to the financial sector more than saying, “Don’t worry about that pesky CFPB, the FSOC can overturn, dismiss, or stay any regulation which puts a crimp in your Safety and Soundness Profitability.

But Wait the GOP isn’t Quite Finished!

“H.R. 3193 makes necessary reforms to an unaccountable Consumer Financial Protection Bureau (CFPB). Specifically, the bill replaces the existing director who has sole responsibility for carrying out the CFPB’s mission with a Commission comprised of the Fed’s Vice Chair for Supervision and four members appointed by the President, with the advice and consent of the Senate.” [GOP HR 3193]

So, we would have an agency without a director — instead ‘governed’ by a committee, the members of which are subject to filibusters by the U.S. Senate.   It took ‘only’ two years to get the Senate Republicans to stop blocking the appointment of one director [HuffPo], imagine how much time could be consumed trying to get four commissioners selected, nominated, and confirmed?

“The bill eliminates the CFPB’s current exemption from the budgetary process and subjects the CFPB to the regular authorization and appropriations process.[2]  It also reins in CFPB salaries by requiring the CFPB to pay its employees according to the GS pay scale like other federal agencies.”

That second part is a nice touch, however it translates to putting the funding of the CFPB under Congressional control.  The CFPB is outside the Congressional claws and inside the protection of the Federal Reserve so that its education and enforcement missions are NOT subject to the whims of Congressional winds.

Once again, nothing says “I Love Bankers” more succinctly than allowing their allies in Congress to jam up the leadership of a regulatory agency and to let Congress bring enforcement to a halt by chopping the agency’s budget.

And… Representatives Joe Heck (R-NV) and Mark Amodei (R-NV) are  all for this?

On February 27, 2014 at 6:39 p.m.  Representatives Amodei (R-NV) and Heck (R-NV) voted in favor of the passage of H.R. 3193 [rc 85]  Representatives Horsford (D-NV) and Titus (D-NV) voted against this latest assault on the Dodd Frank Act provisions.

Background Information: Apuzzo, Bush Administration Weakened Lending Regulations, HuffPo, December 2008.   “Speed Kills,” Desert Beacon, December 16, 2011.  CFPB not out of the woods yet, WaPo, February 27, 2014.  “Cordray Confirmed,” HuffPo, July, 2013.   CFPB, Mission and Budget, 2014.

1 Comment

Filed under banking, consumers, Economy, financial regulation, Politics

One response to “Not So Safe, Not So Sound: Amodei, Heck and H.R. 3193

  1. Reblogged this on Nevada Rural Democratic Caucus and commented:
    Fascinating how the GOP claims to be FOR smaller government and less bureaucracy, but then votes for passage of laws like this that increase the degree of bureaucracy to the detriment of consumers.