Republicans Revive Fight Over Consumer Watchdog Agency

May 6, 2011 5:35pm

ABC News' Matthew Jaffe (@jaffematt) reports: A fight has broken out in Washington over the new consumer watchdog agency. Again.

The agency, the brainchild of longtime consumer advocate Elizabeth Warren, was a contentious issue in the Obama administration's push last year for sweeping Wall Street reforms in the wake of the 2008 meltdown. As Congress debated the Democrats' reform bill last summer, Republicans objected to the agency, arguing that it would wield too much power and could ultimately do more harm than good.

Now they're back at it.

44 of the 47 GOP senators have vowed in a letter to President Obama not to confirm anyone to lead the agency unless the administration makes major structural changes. Among other things, Republicans want to scrap the bureau’s director position and replace it with a five-person board.

But critics say changes like that will only weaken the fledgling agency, cautioning that more bureaucracy would slow its ability to respond to looming financial issues.

Senate Banking Committee chairman Tim Johnson said the GOP needs to let go of a battle they've been waging for the better part of two years.

"The truth is this bureau is already subject to greater checks and balances than any other financial regulator and this is just another attempt by Republicans to delay and derail these critical new protections," Johnson said.

“Republicans in Washington may want to use revisionist history, but Americans haven’t forgotten that the recession was caused in part by predatory lenders and bad actors on Wall Street.”

The group Consumers Union urged Democrats in Congress to fight the new GOP efforts aimed at the new agency.

"We need a cop on the beat to protect consumers from credit card rip-offs and shady mortgages," said Pamela Banks, senior policy counsel for Consumers Union. "If Congress shackles this bureau, lawmakers will be putting consumers at risk of more abuse by big banks and financial scam artists. We learned the hard way that when financial abuses go unchecked, the economy suffers mightily, and consumers get hurt.” 

"We need a watchdog for consumers, not a lapdog for the banks, and that’s why Congress needs to stand up and reject this effort to cripple the CFPB," she emphasized.

But if the 44 Republicans remain united in their demand for major changes to the bureau, then Democrats in the Senate would not have the votes needed to overcome a filibuster and confirm a nominee to lead the agency.

The fight, it seems, is back on.

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