Checks and balances for CFPB director

In early May, a group of 44 Republican senators sent a letter to President Obama that said they will not confirm any nominee for CFPB director unless structural changes are made.

“As presently organized, far too much power will be vested in the CFPB director without any effective checks and balances,” Republicans wrote in the letter.

Meanwhile, the House Financial Services Subcommittee passed three bills that would make significant changes to the bureau. (Read a summary of House Republicans’ proposals to limit the CFPB’s authority.)

However, Warren has pointed out that the following checks and balances are in place, as reported by HousingWire.com:

• The Financial Oversight Stability Council, a separate entity consisting of federal regulators, can overrule the CFPB with a vote. (“The council can act only if the regulation puts at risk the safety and soundness of the entire U.S. banking system or the stability of the U.S. financial system. Moreover, the procedural requirements for the FSOC to act are so high that it would be practically impossible for the FSOC to overrule the CFPB director,” the Republicans argue in their letter.)
• Under Dodd-Frank, the CFPB is required to submit annual financial reports to Congress twice each year.
• The CFPB director is required to testify before Congress twice each year on the bureau’s activities.
•  The Government Accountability Office will conduct an audit each year on the bureau’s expenditures and submits a report to Congress.
• The CFPB must submit its financial operating plans, forecasts and quarterly financial reports to the Office of Management and Budget.

In its 2012 appropriations bill , the House Appropriations Committee limited the mandatory funds for the CFPB to $200 million. Additionally, if the Republicans get their way, the bureau would be subjected the annual appropriations process beginning in 2013. Currently the CFPB has a funding cap of $600 million – a percentage of the Federal Reserve’s budget – and is independent of the appropriations process.

“This new agency created by the Dodd-Frank legislation has not yet been fully constituted and many questions remain as to its authority and mission,” the committee said, according to the American Bankers Association.