Deceptive Legislation to Undermine Consumer Protections

By Nancy Wilberg Ricks, Senior Policy Strategist, NCLR

This week, the Senate Appropriations Committee conducted a markup of the 2016 fiscal year budget knowing there would not be much consensus. This was a symbolic gesture that makes a mockery of the appropriations process. Rather than focusing on restoring programs to full funding levels, which would respond to Americans’ needs, decision-makers attempted to use today’s proceedings to weaken financial regulation and consumer protections.

The appropriations bill adopted an amendment that included more than 200 pages of Senator Richard Shelby’s (R–Ala.) “Financial Regulatory Improvement Act of 2015” to ease bank regulations. This was an attempt to pass a massive regulatory relief bill that was previously and adamantly rejected by consumer supporters. Under the guise of helping small and community banks, this bill actually exempts major lenders from essential mortgage provisions that were designed to prevent another economic meltdown. The financial entities that would benefit from these relaxed regulations include multihundred billion–dollar institutions comparable in size to banks like Washington Mutual and Countrywide, which played a major role in the financial crisis.

The amendment also attacked consumer protections. Despite being aware of its proven success, decision-makers sought to alter the Consumer Financial Protection Bureau’s (CFPB) leadership structure from one director to a multimember commission. Historically, five-member boards have hobbled decision-making and increased gridlock—something Washington already experiences far too often. The bill also subjects the CFPB to the appropriations process. In 2010, when Congress passed the bipartisan Dodd-Frank Wall Street Reform and Consumer Protection Act it deliberately kept the CFPB away from an annual appropriations process. As with every regulatory banking agency, the CFPB’s independent funding insulates it from partisan attacks. Congress established this funding stream of non-taxpayer dollars for the Bureau to come from the Federal Reserve.

Today is a perfect example of how the appropriations process can be subverted for pure political gain. It also highlighted the amnesia Washington has when reflecting on our economic past. This fight exhausts Americans. Rather than rolling back consumer wins and strong regulation, leaders should build on these successes and join the fight in creating a more resilient financial system for all.