Trust a central banker to focus on the money.
The Federal Reserve has already set up the operating accounts and initial funding for the new Consumer Financial Protection Bureau, which will officially open for business next July, says Fed chief Ben Bernanke.
In written testimony prepared for a congressional hearing on Thursday morning, Bernanke says a transition team headed by Fed governor Elizabeth Duke is working to transfer the Fed’s consumer protection responsibilities to the new agency.
“We have established the operating accounts and initial funding for the bureau, and we have provided the Treasury detailed information about our programs and staffing in the areas of rulemaking, compliance examinations, policy analysis, complaint handling, and consumer education,” Bernanke’s prepared testimony says. “We are also providing advice and information about supporting infrastructure that the Bureau will need to carry out its responsibilities, such as human resource systems and information technology.”
Although he didn’t specify exactly how much is in those operating accounts, consumer advocates estimate that the new Consumer Financial Protection Bureau will have an annual budget of about $550 million. Democrats who wrote the Dodd-Frank financial reform law that created the consumer agency were careful to stipulate that it will be funded with up to 10 percent of the total operating expenses of the Federal Reserve System. That means the agency is not dependent upon the annual Congressional appropriations process.
Missing from the testimony: any reference to Elizabeth Warren, the controversial Harvard law school professor who is a White House adviser to help the launch the new consumer agency.
Bernanke’s written remarks also tout what the Fed is doing to comply with the Dodd-Frank law’s requirement for more transparency of its balance sheet and liquidity programs. By Dec. 1, Bernanke says, the Fed will provide detailed information about its transactions from December 2007 through July 2010. “This information will include the names of counterparties, the date and dollar value of individual transactions, the terms of repayment, and other relevant information,” he said.
In the future, Fed-watchers can expect to regularly see the identities of the central bank’s counterparties, amounts financed or purchased and collateral pledged for transactions under the discount window, open market operations, and emergency lending facilities.
Also testifying at tomorrow's Senate Banking Committee hearing about the hand-off of responsibilities to the new consumer agency are FDIC Chairman Sheila Bair, SEC Chairman Mary Schapiro, Treasury Deputy Secretary Neal Wolin, CFTC Chairman Gary Gensler, and acting Comptroller John Walsh.