As Elizabeth Warren continues to draw attention to herself — in what’s likely to set her up for a 2020 presidential bid — Ted Cruz is looking to remove one of the achievements she can claim.Following the 2007-2008 global financial crisis, Dodd-Frank authorized the creation of the Consumer Financial Protection Bureau (CFPB) in 2010 — an agency Warren initially proposed in 2007. She led the way to establish the agency, and served as a special adviser to it, until August 2011.
The “oversight” agency has long been criticized for the surprising lack of oversight it receives. The agency’s power is concentrated largely in the hands of its director, Richard Cordray, and funding pulled from the Federal Reserve, meaning it has no need to seek annual appropriations from Congress.And that’s worked well for the employees of the agency — 1 in 4 of which are earning over $150,000 a year.
If Warren does run in 2020, among the challenges she’ll face is explaining why an agency she was instrumental in creating was quickly abolished, because, as the Washington Examiner reported:Texas conservative Sen. Ted Cruz on Tuesday introduced legislation to “abolish” the Consumer Financial Protection Bureau, highlighting the threat to the agency from the Right.
Cruz called the CFPB, created by President Barack Obama’s 2010 financial reform law as the brainchild of Elizabeth Warren before her election to the Senate, an “out-of-control bureaucracy.”
His legislation, he said, would give Congress “the opportunity to free consumers and small businesses from the CFPB’s regulatory blockades and financial activism, which stunt economic growth.”Cruz’s legislation, introduced with Republican Rep. John Ratcliffe of Texas in the House, goes further than legislation being formulated by the House Financial Services Committee. Neither Cruz nor Ratcliffe is on the banking committee in their respective chamber.
In a recent Wall Street Journal op-ed, House Financial Services Committee Chairman Jeb Hensarling, R-Texas, said it would not be possible to overcome a Democratic filibuster to abolish the bureau. Instead, he called for the agency to be “functionally terminated” through a roundabout legislative process using a budget tool that provides for passing legislation with a simple majority in the Senate.
Nevertheless, Cruz’s legislation highlights the array of possible changes facing the new agency from the unified GOP government. Also on Tuesday, Sen. Mike Rounds, R-S.D. introduced legislation that would, according to his office, “dismantle” the agency by denying it funding through the Federal Reserve, which currently provides its funding, and preventing it from keeping any fines it collects from businesses. Another possible threat to the consumer bureau is that of President Trump trying to fire its Obama-appointed director, Richard Cordray, and appointing instead a regulator more aligned with Republicans.According to Cruz, we shouldn’t let the name fool us, because the agency does little to “protect consumers.” Rep. Hensarling goes so far as to declare the agency unconstitutional.
Stay tuned for the defense we’re guaranteed to hear about this disaster of a government agency, as the debate heats up.
[Note: This post was written by Matt Palumbo. Follow him on Twitter @MattPalumbo12]