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Project on Government Oversight

Groups Oppose Measures to Repeal Dodd-Frank Financial Reform and Weaken Consumer Protection Agency

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June 8, 2011

Dear Senator,

We are writing because we strongly oppose amendments to the Economic Development Revitalization Act, S. 782, to gut the new Consumer Financial Protection Bureau (CFPB) (#391, Moran) or repeal the Dodd-Frank Wall Street Reform and Consumer Protection Act altogether (#394, DeMint).

In particular, we call your attention to Moran, #391, which would effectively strip the CFPB, the nation’s first financial agency with only one job, protecting consumers, of its very ability to protect consumers. The Moran amendment places the regulators who failed to protect us from the predatory practices that led to the 2008 financial collapse in charge of the CFPB. It proposes this major change less than six weeks before the CFPB turns on the lights

Among the flaws of the Moran amendment are the following:

  • Replaces CFPB’s independent director with a stacked board dominated by current regulators: Three seats on the proposed six-member Board would be filled by the current prudential regulators (OCC, FDIC, and the Fed); three would be appointed by the President with a 2/1 party split. This puts failed regulators into authority over consumer protection, a job they couldn’t and didn’t do. This also establishes an even-numbered membership board, which is a recipe for regulatory paralysis. Further, the current CFPB structure already gives the current regulators a veto over its decisions, which this amendment retains.
  • Makes CFPB the only financial regulator subject to appropriations process: The amendment replaces CFPB’s independent funding from the Federal Reserve with a 100% appropriations-based process. No other bank regulator is subject to the politically-charged appropriations process. The CFPB, by the way, is the only bank regulator that already has a capped budget. 
  • Adds additional rulemaking burden: The amendment requires that CFPB consider the impact of a rule on the safety or soundness of “an insured financial institution;” again, current CFPB structure already provides that any rule can be vetoed if it threatens financial stability. The purpose of this change is to allow any financial institution conducting any predatory practice to erect a false “safety and soundness” defense to trump consumer protection rules.

The Moran amendment must be defeated. It is designed to change the mission of the CFPB from protecting consumers to protecting banks. The CFPB is already fully accountable to the President, Congress, the judiciary and the American people. Yet, in a careful balance that would be upended by the Moran amendment, it is also independent of banking industry pressure. In enacting the CFPB, Congress took numerous steps to ensure that the CFPB’s independence would not be compromised by overwhelming political pressure from the financial services industry, as happened with several key banking regulators.  At the same time, the Dodd-Frank Act placed a number of unprecedented controls on the CFPB’s authority to ensure that the agency pursues its consumer protection mission in a balanced and responsible manner.  The CFPB must also comply with a number of existing laws that govern and restrict the actions of federal agencies, such as the Administrative Procedures Act.

We urge your strong opposition to the Moran amendment to gut the CFPB. Further, we urge strong opposition to the DeMint amendment designed to repeal the landmark law designed to clean up the economic recession caused by unsafe Wall Street practices. What happened on Wall Street wreaked havoc on jobs, home and retirement values and the economy. In 2011, average Americans -- from soldiers to factory workers to retirees – continue to suffer from the fallout of the economy’s collapse in 2008. We need a strong consumer cop on the beat. We also need to implement, not repeal, Wall Street reform.

Sincerely,

Americans for Financial Reform

AFL-CIO

Alliance for a Just Society

California Reinvestment Coalition

Campaign for America’s Future

Center for Digital Democracy

Center for Media and Democracy

Center for NYC Neighborhoods

Center for Responsible Lending

Communications Workers of America

Community Organizations in Action

Community Reinvestment Association of North Carolina

Consumer Action

Consumer Federation of America

Consumer Watchdog 

Consumers Union

CTW Investment

Demos

Empire Justice Center

Empowering and Strengthening Ohio’s People

Food & Water Watch

Foreign Policy in Focus

Global Financial Integrity

Greenlining Institute

Insight Center for Community Economic Development

International Brotherhood of Teamsters

Main Street Alliance

NAACP

National Association of Consumer Advocates

National Consumer Law Center, on behalf of its low-income clients

National Community Reinvestment Coalition

National Council of La Raza

National Fair Housing Alliance

National People’s Action

Neighborhood Economic Development Advocacy Project (NEDAP)

OSPIRG

PICO National Network

Project On Government Oversight

Public Citizen

SEIU

The Institute for College Access and Success (TICAS) and its Project on Student Debt

Tax Justice Network USA

The Leadership Conference on Civil and Human Rights

US Action

U.S. PIRG

Woodstock Institute