WASHINGTON — Senate Republicans effectively declared war on the Consumer Financial Protection Bureau on Thursday when they vowed to block the nomination of any permanent director unless Congress agrees to sweeping changes to the agency's structure.
In a joint letter to the president, 44 Senate Republicans - more than enough to maintain a filibuster of a nominee — urged the adoption of legislation that would replace the agency's director with a five-member commission, subject the bureau to the appropriations process, and allow banking regulators the power to override the CFPB.
Republicans are essentially re-fighting a battle they lost last year, when they tried and failed to change the structure of the agency during the debate over Dodd-Frank.
"Today's letter delivers a commitment by 44 Republican Senators to fix the poorly-thought structure of this agency that will have unprecedented reach and control over individual consumer decisions — but an unprecedented lack of oversight and accountability," Minority Leader Mitch McConnell said in a press release. "The reforms outlined are necessary before we will consider any nominee to head this agency."
Republicans said the director of the new consumer bureau would have unprecedented authority over financial institutions that could limit consumer choice, restrict the availability of credit for consumers and increase the costs of financial products and services. New regulations could also put small businesses and banks at a competitive disadvantage, they said.
The Dodd-Frank Act failed to provide any real check on the director's power, the letter said. While the Financial Stability Oversight Council may overrule the bureau's decisions, Republicans said the circumstances under which they may do so are "so narrow as to make this check illusory."
The Republicans are also seeking to have Congress control the CFPB's budget. Under Dodd-Frank, the agency takes its funds from the Federal Reserve Board.
"This is about accountability," Sen. Richard Shelby, the top Republican on the Senate Banking Committee, said in a press release. "The bureau, as currently structured, lacks any semblance of the checks and balances inherent in the Constitution. Everyone supports consumer protection, but we should never entrust a single person with this much power and public money. We are simply asking the President to support common sense reforms that provide the accountability absent in the current structure."
