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House passes CFPB reform bill

Dramatic bureau overhaul goes to Senate

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Update 1: 4:04 p.m. ET - Added live tweets from ongoing coverage below.

Update 2: 5:27 p.m. ET - Additional comments from members added.

Update 3: 6:40 p.m. ET - Final vote information added.

The Consumer Financial Freedom and Washington Accountability Act, sponsored by House Financial Services Committee member Rep. Sean Duffy, R-Wisc., passed the House on a largely party line vote Thursday evening, with 10 Democrats joining 222 Republicans in the majority vote. No Republicans joined the 182 Democrats opposing the reform bill

The CFPB reform bill would replace the single Consumer Financial Protection Bureau director with a five-member commission appointed by the president and confirmed by the Senate, bring its budget under Congressional control, and provide more oversight for the bureau, currently under the aegis of the Federal Reserve.

The measure now goes to the Democrat-controlled Senate where it faces an uphill battle.

Supporters of the reform bill say it would ensure that a diversity of viewpoints inform the CFPB’s regulatory and enforcement agenda. It would also conform the bureau’s governance to that of other federal agencies charged with consumer or investor protection.

House Financial Services Committee Chairman Jeb Hensarling, R-Texas, took the field first in the debate before the vote, accusing the CFPB of being unaccountable and out of control. Hensarling talked at length about the expenses the CFPB has been racking up.

“The CFPB has unbridled power to impose rules like the QM rule. According to Federal Reserve reports, one-third of blacks and Hispanics would not be able to get a mortgage,” Hensarling said. “This is designed to make the Bureau more accountable and transparent… We know that this is an agency that was designed to be unique, if not perhaps rogue; it is an agency like no other. Arguably it is the single most powerful and least accountable Federal agency in the history of our nation and thus demands rigorous oversight. The American people deserve better.”

The bill further subjects the CFPB to the regular appropriations process and makes the CFPB a stand-alone independent agency rather than a bureau within the Federal Reserve System.

“We do need protection for consumers from Wall Street but consumers need to be protected from Washington as well,” Hensarling said.

U.S. Rep. Randy Neugebauer, R-Texas, authored parts of the measure that would subject CFPB to the normal appropriations process like other regulators.

“Right now, CFPB can simply draw money from the Fed whenever it needs,” Neugebauer explained.  “This bill is important not only because it makes the budget accountable to taxpayers, but also because it allows Congress to regularly evaluate CFPB’s performance and detect waste, fraud, and abuse.”

U.S. Rep. Maxine Waters, D-Calif., rose in opposition to CFPB reform.

“The CFPB has been immensely successful in protecting consumers. Enforcement actions more than $3 billion refunded to 9 million consumers,” Waters said.

She further said the change to the leadership structure to a five-member commission would increase bureaucracy and weaken the bureau.

"The CFPB has ensured that all consumers have fair and transparent access to consumer financial products and services.  It has written important mortgage rules that prevent lenders from engaging in the risky and irresponsible practices that led to the collapse of the housing market and fueled the 2008 global financial crisis," Waters said. "But Republicans don’t believe that we should have a consumer advocate in government – they would prefer these unscrupulous actors continue to take advantage of consumers without interference. And the simple fact is that H.R. 3193 would accomplish this goal – obstructing the CFPB’s ability to protect consumers from deceptive marketing, unlawful debt collection, lending discrimination, overcharged fees and other illegal activity."

House Financial Services Committee minority member U.S. Rep. Gary Peters, D-Mich.,  urged his colleagues to vote against the reform bill, saying it would weaken the CFPB and impede the Bureau’s ability to provide critical consumer protections for American middle-class families.

“We have come a long way since the financial crisis of 2008 and now is not the time to turn our back on the middle class. This misguided bill would weaken the CFPB and its ability to provide necessary consumer protections to families in Michigan and across the country. Instead of voting to undermine the CFPB, we should be standing up for consumers and making our financial system work for them,” Peters said.

Critics of the CFPB also criticized the CFPB's plans to spend $145 million on office renovations for a building it does not even own. The Federal Reserve inspector general launched an investigation into why renovation costs for the CFPB’s headquarters have soared to more than three times the original estimate.

Debate continues throughout Thursday. Developing…

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