WASHINGTON — Rep. Barney Frank, the lead Democrat on the House Financial Services Committee, said Thursday the ongoing stalemate over the confirmation of a director at the Consumer Financial Protection Bureau will not be resolved until at least 2012.
"I think it depends on the next election," Frank said at the Consumer Federation of America's financial services conference in Washington. "I don't see that deadlock being broken."
Frank said he regrets making the agency's full authority contingent on the Senate confirmation of a director — a provision pushed by Senate leaders. But he said the situation is not as bleak as some have said: the bureau still has the power to enforce all existing consumer financial laws that transferred from other regulators.
Until a permanent director is in place, the CFPB can supervise large banks, but cannot regulate nonbanks or prohibit abusive acts or practices.
Republicans have refused to allow a vote on the nomination of Richard Cordray, the president's nominee to be the bureau's first director, until several changes are made, including replacing the director with a commission, subjecting the bureau to the appropriations process and making it easier for other regulators to override the bureau's rules.
Frank said it seems that getting a director confirmed is in the best interest of banks and credit unions, many of whom will be subject to the bureau's rules and oversight while their nonbank counterparts are not.
Frank noted that few Republicans have any specific objection to Cordray.
Although he expects the stalemate to continue, Frank said he hopes it will become an issue on the campaign trail.
"What I'm hoping is that enough Republican candidates for the Senate will be confronted with this notion about whether you want to have a new consumer bureau," Frank said.
He does not expect, however, that consumer protection or even financial reform will be a top issue in the presidential race.
Frank said he was recently contacted by a Republican constituent who was asked by the GOP to identify the top issues he would like the party to address in 2012. Financial reform was conspicuously absent, he said.
"So it's our job to make that an issue in the next election," Frank said to the crowd of consumer advocates, noting that risk retention, leadership at the CFPB and implementation of new derivatives rules should be the top three issues.
He also blasted House and Senate Republicans for proposing a 15% decrease in funding for the Commodity Futures Trading Commission, the agency that has one of the largest increases in authority under the Dodd-Frank Act. That could prevent the agency from hiring adequate staff to write and implement the new rules, he said.
"They may not like the regulations, but the worst case is to have the regulations and not have very competent people to administer them," Frank said.
The CFTC also serves as an example of what could happen at the CFPB if it is subject to appropriations, as Republicans would prefer, Frank said. It would also be the only banking regulator that had to ask Congress for funding.
Raj Date, the bureau's interim leader, who also addressed the conference Thursday, said, "Independent funding of the CFPB and other supervisors ensures that we're not at the mercy of outside influences when it comes to protecting consumers or protecting the safety and soundness of financial institutions."
Date also stressed that, without a director, many of the nonbanks that originated and sold problem loans will not be regulated.
"It shouldn't matter if you're a bank or a thrift or an ILC or a finance company or an investment bank," Date said. "If you want to participate in the consumer finance business, you ought to play by same rules as everyone else."
