ABA wants more oversight, accountability for CFPB
The American Bankers Association testified Wednesday before the House Financial Services Committee, emphasizing the need for oversight of the Consumer Financial Protection Bureau. Leslie Andersen who is president and chief executive officer of Bank of Bennington in Bennington, Neb., spoke on behalf of the trade group. She claimed the CFPB divided the concepts of consumer protection from safety and soundness supervision, which should be one single focus. "My bank’s philosophy — shared by banks everywhere — has always been to treat our customers right and do whatever we can to make sure that they understand the terms of the loans they are taking on and their obligations to us," Andersen said. "It is an inescapable fact that fair service to our banking customers is inseparable from sound management of our banking business." According to Andersen's testimony, structural improvements and oversight to the CFPB must be conceived to ensure the regulator is accountable to the fundamentals of safe and sound operation, to the gaps in regulatory oversight of non-banks, and to the principle of consistent regulation. Elizabeth Warren, the special adviser to the Treasury Department who is setting up the CFPB, appeared on Bloomberg News last week to defend the transparency and accountability of the organization. She said that the CFPB is just like any other government organization subject to the authority of the Treasury and other regulatory entities. Warren argued that the CFPB was actually one of the most overseen regulating bodies. Andersen and the ABA suggested replacing a director for the organization with a commission, so the voting standard would be a majority vote instead of in the hands of one person. Rep. Spencer Bachus (R-Ala.) introduced a bill in March that would accomplish this very goal, and establish a five-member bipartisan commission to carry out the duties of a director at the CFPB. 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. Warren is likely to get the nomination as director of the bureau. But both Bachus and Andersen said these powers would be in better hands with a commission, not a director. "A commission structure would broaden the perspective on any rulemaking and enforcement activity of the Bureau, and would provide needed balance and appropriate checks in the exercise of the Bureau’s authority," Andersen said. Write to Christine Ricciardi. Follow her on Twitter @HWnewbieCR.