February 25, 2024

Warren Defends Agency at Chamber of Commerce

WASHINGTON — She never actually uttered “I come in peace,” but Elizabeth Warren, the Obama administration aide charged with setting up the new Consumer Financial Protection Bureau, might have felt like an alien visiting an anxious planet Wednesday when she went to the United States Chamber of Commerce.

“I do not consider myself in hostile territory right now because I believe we share a point of principle: competitive markets are good for consumers and for businesses,” Ms. Warren told about 300 executives at the chamber’s annual conference on capital markets. But, she added, “Markets don’t work in the way they are supposed to unless there are some well-enforced rules.”

The detail and scope of those rules are what worry the members of the chamber and some members of Congress, both of whom have been vocal in their criticism of the regulatory powers given to the new consumer agency by the Dodd-Frank Act, the financial regulation bill signed into law last July.

The disagreements between Ms. Warren and one of her chief critics, Representative Spencer Bachus, Republican of Alabama and chairman of the House Financial Services Committee, grew more heated hours after her address. Mr. Bachus accused Ms. Warren of mischaracterizing her recent participation in the mortgage service industry settlement talks.

Last week, Ms. Warren told the committee that she provided “advice” to the Treasury secretary and others about a possible settlement but was not involved in the negotiations. State attorneys general and federal officials are discussing a settlement with mortgage service companies in response to questionable foreclosure practices.

On Wednesday afternoon, Mr. Bachus released a seven-page document titled “Perspectives on Settlement Alternatives in Mortgage Servicing,” which, in a letter to Ms. Warren, he said demonstrated that she had a larger role than she had indicated to the committee.

“It is plain that the C.F.P.B. has done more than provide ‘advice’ on the proposed servicing settlement,” Mr. Bachus wrote. The letter requested that Ms. Warren consider “if there are any aspects of that testimony related to the C.F.P.B.’s role in the mortgage servicer settlement negotiations that you wish to clarify or correct.”

The letter was co-signed by Representative Shelley Moore Capito, Republican of West Virginia and chairwoman of the subcommittee on financial institutions and consumer credit.

Jen Howard, a spokeswoman for the consumer agency, said that Ms. Warren correctly characterized her participation. “As Elizabeth Warren testified to Congress earlier this month, the consumer bureau provided advice to various officials involved in the mortgage servicing law enforcement matter,” Ms. Howard said in a statement. “She is aware that not everyone agrees with that advice or how to address the serious deficiencies at some of the nation’s largest mortgage servicing firms.”

Mr. Bachus, a consistent critic of both the consumer agency and Ms. Warren, filled that role again Wednesday when he addressed the Chamber of Commerce conference immediately before she spoke.

Noting that he has introduced a bill to change the governance of the consumer bureau from a single director to a five-person, bipartisan commission, he characterized the powers given to the head of the consumer agency as unmatched in government.

“They regulate all financial products and services, so if it involves a dollar changing hands, they can regulate it, or she can, because she actually has total discretion” over consumer financial products, Mr. Bachus said. “If George Washington came back today, or Abraham Lincoln or Warren Buffett signed up, I wouldn’t give that person total discretion.”

Ms. Warren was followed by Thomas J. Donohue, president and chief executive of the chamber, who warned that the consumer agency could choke off economic growth in the United States.

“If not used carefully, the C.F.P.B.’s tremendous power to go after bad actors could cause serious collateral damage to America’s job creators,” he said.

Ms. Warren has disputed the notion that the consumer agency has unbridled power. “There are plenty of checks in place,” she said, including a law governing how federal agencies write and adopt new regulations. Its rules, like those of any agency, can be overturned by Congress or federal courts.

In addition, she said, the consumer bureau is “the only bank regulator — and perhaps the only agency anywhere in government — whose rules can be overruled by a group of other agencies,” specifically the Financial Stability Oversight Council, composed of nine regulatory agency heads and an independent insurance industry expert. A two-thirds vote of the council is required to overturn a consumer agency rule.

Ms. Warren also warned against making the agency subject to annual appropriations of Congress, saying it would inject politics into the regulatory structure and cause banks and other regulated agencies to lobby for looser oversight.

Regulation and competition are not, she said, mutually exclusive. “In fact, when done right, they support each other,” Ms. Warren said. “Are the Chamber’s members, as citizens or business owners and executives, in a better place today because the F.A.A. regulates air safety, because the states regulate insurance companies, because the federal government enforces antitrust statutes? Of course they are. And so is this country.”

Article source: http://feeds.nytimes.com/click.phdo?i=bf5e66036f4ea6788f18c6af5ba18c8a

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