Bachus bill would install commission, not director at CFPB

Rep. Spencer Bachus (R-Ala.) introduced a bill Wednesday that would establish a five-member bipartisan commission to carry out the duties of a director at the Consumer Financial Protection Bureau. The CFPB is scheduled to open July 21, and under the Dodd-Frank Act, it would oversee the transparency and fairness of financial instruments for consumers. It would become the de facto overseer for the entire mortgage market, including mortgage servicers. Elizabeth Warren, the special adviser to the Treasury Department, is setting up the CFPB and is likely to get the nomination as director of the bureau. But Bachus said these powers would be in better hands with a commission, not a director. "It always seemed clear to me that the Dodd-Frank Act put too much power in the hands of one person," Bachus said. "Under the Dodd-Frank Act, the director of the CFPB is given a broad and virtually unlimited mandate to substitute his or her judgment for that of consumers and the free market. Because the CFPB might be the most powerful agency ever created, I am introducing this bill to ensure that a non-partisan, balanced approach to consumer protection prevails." But in a hearing Wednesday, Warren said the CFPB will not be the most powerful agency in the U.S. The Financial Oversight Stability Council, which will be a mix of other regulators, will have the ability to override any rule the CFPB writes. And because the bureau cannot set its own budget and must go to Congress for any additional funds it needs, it will be one of the most accountable agencies in government, Warren said. Still, Bachus said the commission he recommends would mirror other regulatory bodies such as the Federal Deposit Insurance Corp. and the Securities and Exchange Commission. "Empaneling a five-member commission is an important first step in ending predatory financial practices without inappropriately limiting access to credit that small businesses and individuals want and need," Bachus said. "We can achieve consumer protection without a credit czar." Write to Jon Prior. Follow him on Twitter: @JonAPrior

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