House Republicans Question Warren on CFPB Organization and Policy
Despite the lack of a permanent director, the consumer financial regulator is gearing up for its June launch.
Executives of CUNA and NAFCU have met with officials of the Consumer Financial Protection Bureau, and Republicans on Capitol Hill are asking questions about the bureau's operations and how far it will go when regulating financial products
Officials of the trade associations haven't disclosed the details of their discussions but said they found bureau officials understood the unique nature of credit unions.
CUNA and NAFCU officials have met with Elizabeth Warren, a special assistant to President Obama who is setting up the bureau and several of her aides, including Steve Antonakes, who is in charge of financial services examinations, and Holly Petraeus, who is in charge of military outreach.
All credit unions have to comply with the bureau's rules and regulations, but the bureau itself will only directly handle the enforcement at credit unions with assets of more than $10 billion: Navy FCU, Pentagon FCU and State Employees CU of North Carolina. However, the bureau can go on joint examinations with the NCUA if there is a practice that the bureau is concerned about.
Warren has cited two areas that will be top regulatory priorities: Consolidating duplicating and overlapping mortgage forms mandated by the Truth in Lending Act and the Real Estate Settlement and Procedures Act and simplifying credit card agreements.
But House Republicans, who almost unanimously opposed the financial overhaul bill passed last year that created the bureau, have promised to use their new majority status to monitor its operations closely.
Saying that she is "executing a fatally flawed plan," the lawmaker in charge of overseeing the new consumer agency asked Warren four pages of organizational and policy questions on the new consumer bureau.
Rep. Randy Neugebauer (R-Texas) asked Warren to explain which policies "are in place to avoid potential duplicative, conflicting or overlapping rulemakings that are currently under way, but will ultimately be under the regulatory authority of the CFPB?"
He also asked Warren how the new bureau plans to evaluate the impact of its regulatory efforts so as to "avoid the overregulation that might stifle financial innovation and leave some market participants worse off."
Neugebauer, who chairs the House Financial Services Committee's subcommittee on oversight and investigations, also asked Warren about the bureau's hiring practices and its budget.
President Obama hasn't named a director of the bureau, which is housed in the Treasury Department while it is being set up and then will be moved to the Federal Reserve.
In response to an earlier inquiry by House Financial Services Committee Chairman Spencer Bachus (R-Ala.), the inspectors general of the Federal Reserve and Treasury Department emphasized the openness of the process of setting up the bureau.
They noted that all participants-including those from outside groups-in meetings on the implementation of the financial overhaul bill are listed on the Treasury Department's website.
The inspectors general also said the bureau has determined that it will have three directorates: education and engagement, supervision and enforcement, and research, markets and rules.
But the Treasury Department "does not have a formal process" for input on the organizational planned budget, the inspectors general wrote.
They also wrote that even though the Treasury secretary has ultimate authority for setting up the bureau, he doesn't have the authority to conduct supervisory exams before the new bureau starts up. He may, however, have examiners from the bureau participate in the examinations conducted by current regulators. Those exams can only be conducted on financial institutions with assets of more than $10 billion.