Republican senators start attack on U.S. consumer financial watchdog

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By Lisa Lambert | WASHINGTON

WASHINGTON Republicans lawmakers are starting to
put in motion plans to destroy or defang the U.S. agency
intended to protect individuals from financial fraud.

On Tuesday, two Texas Republicans, Senator Ted Cruz and
Representative John Ratcliffe, introduced a one-page bill to
kill the Consumer Financial Protection Bureau entirely.

Their move comes a few days after Representative Jed
Hensarling, the chairman of the House Financial Services
Committee, outlined a plan to limit the independent agency’s
power and to crimp its funding via Congress’ budget process.

The agency focuses on financial products such as mortgages
and student loans.

Next up: David Perdue, a Republican from Georgia on the
Senate Banking Committee, will introduce a bill to make the CFPB
more accountable to Congress by changing its funding mechanism,
according to an aide. Unlike a complete elimination of the
agency, which would require 60 votes, Perdue’s bill could be
affixed to budget legislation that could become law with a
51-vote majority vote in the Senate.

Senate Democrats, including Elizabeth Warren from
Massachusetts and Sherrod Brown, the senior Democrat on the
Banking Committee, have vowed to block changes they say would
weaken the CFPB’s independence.

Killing the agency altogether would be a hard sell, and even
some banking lobbyists have said they would be comfortable with
a more restricted CFPB.

The agency, which is also facing a court test, was created
in the 2010 Dodd-Frank Wall Street reform law. Its sole
director, currently Richard Cordray, serves a fixed term and its
budget flows through the Federal Reserve without being subject
to congressional review.

Republicans criticizing the CFPB say it overreaches its
authority, pushes unnecessary regulation on small banks and uses
large fines to direct lenders’ behavior without going through
proper rule-making processes. Perdue has also struck at the
agency more specifically, introducing a resolution to repeal a
new CFPB regulation requiring prepaid cards to disclose their
terms prominently.

Hensarling’s plan, which anti-CFPB lobbyists and
congressional staffers are positing as a compromise, would push
some CFPB powers to other agencies while making its budget
subject to congressional review and its director a political
appointee. Others want to see the agency become a five-member
bipartisan commission.

President Donald Trump, also a Republican, was elected
partly on promises to lighten regulation and is expected to sign
any CFPB-related legislation that reaches his desk.

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