Republicans may claim that the Consumer Financial Protection Bureau has too much power, but the money and lobbying has piled up on the other side.
Rep. Spencer Bauchus may have called the Consumer Financial Protection Bureau "the most powerful agency ever created," but a new piece at The Nation by Ari Berman details the extensive power being marshaled on the other side. While the Republicans who are trying to handcuff its authority claim to be defending small community banks and businesses, the real money is coming from much deeper pockets:
Warren and the CFPB are up against what she estimates to be a $3 trillion consumer financial services industry, which views the bureau as a potentially grave threat to its prosperity. According to the Center for Responsive Politics, 156 groups -- the vast majority representing corporate interests -- lobbied the government about the CFPB in the second half of 2010 and the first quarter of 2011. The list ranged from JPMorgan Chase to McDonald's.
And it goes on further:
The Chamber [of Commerce] has an entire division devoted to fighting Dodd-Frank, the Center for Capital Markets Competitiveness, and a huge budget. In the first quarter of this year, the Chamber spent $17 million on federal lobbying, far more than any other group, with a dozen lobbyists focused on the CFPB alone. In 2009 the Chamber was anything but subtle in its attacks on the bureau. "We're fundamentally trying to kill this," said senior director Ryan McKee.
It's pretty clear why banks of all shapes and sizes would be lining up against this Bureau. For the first time in decades, the CFPB promises to be a watchdog on lenders that looks out for the consumer with some actual teeth. That will likely mean crackdowns on payday lenders, debt collectors, loan sharks, and others. But why would the Republicans be the first line of defense in this fight? After all, they've proposed bills to replace the single job of director with a five-member committee, make it easier to overturn and veto the new rules it writes, and prevent it from using its powers until it has a permanent director. (Meanwhile, they've threatened to block any nominees to that position, effectively kneecapping its authority if that bill were to pass.) All of this is likely to slow down the reforms and regulations that the agency has been tasked with creating.
As I've pointed out before, the GOP's timing couldn't be worse for the middle class. A recent report showed that these days a single worker needs an income of $30,012 a year to cover basic expenses and save up for retirement and emergencies -- in other words, achieve financial stability -- which is about three times the national poverty level. A single worker with two young children needs $57,756 a year, and a family with two working parents and two young kids needs $67,920. But wages have actually been falling for the first time ever over the past decade, which lead to the median American family's earnings dropping to $47,127 in 2010 -- only enough for a single worker to meet financial stability. When Americans don't have enough income flowing in, they turn to debt to plug the holes. That's a big part of the reason that Americans carry $796.1 billion in revolving debt. With so many relying on credit products, you would think it would be imperative to make sure they're safe. As Elizabeth Warren herself has pointed out, we do more to ensure that consumers can't buy toasters that have a 1 in 5 chance of exploding than we do to ensure that consumers don't take out mortgages that have the same chance of putting a family on the street.
Yet Republicans stand in shoulder to shoulder opposition. As quoted in Berman's piece, Hazen Marshall, a former Republican staff director for the Senate Budget Committee, said earlier this year, "If the House Republicans had their way, they would just repeal the CFPB!" The answer to why they have taken this stance might lie in following the money that he traces so well.
And the fight won't be over even if the current Republican bills are struck down. "Everyone agrees the real fights are yet to come, once the CFPB goes live and begins tackling difficult issues like policing scams in the credit and mortgage markets, and cracking down on overdraft lending fees and shady prepaid credit cards," Berman reports. "'There's bound to be a fight about every single rule-making, supervision and enforcement action,' says [Lisa] Donner of AFR."
Buckle up, it's going to be a long fight. But it's one that's worth having.
Bryce Covert is Assistant Editor at New Deal 2.0.