Two House Republicans who collected sizable campaign contributions from banks and financial services companies have asked the inspectors general of the Treasury Department and the Federal Reserve to investigate how the new Consumer Financial Protection Bureau is being set up.
Spencer Bachus of Alabama, the presumptive chairman of the House Financial Services Committee next year, and Judy Biggert of Illinois, in line to head the panel’s investigative subcommittee, asked both watchdogs to prepare their findings by Jan. 10, report Victoria McGrane and Deborah Solomon of the Wall Street Journal.
No doubt the findings will trigger a hearing or two with testimony from Elizabeth Warren, the Harvard law professor who is advising the Treasury Dept. on how to organize the new agency for its formal opening in July. The Republicans’ letter to the inspectors general said they “are concerned that Professor Warren will be approaching this task without any experience managing—or creating—an organization of this scale and importance.” It also asks the watchdogs to investigate how much power Warren has in her advisory position, and how much authority the bureau has to write rules before it has a full-time director.
Big banks’ ties to Bachus, Biggert
Bachus, a critic of the Dodd-Frank reform law, easily won reelection last month with a campaign fueled in part by big bank political action committees, according to Federal Election Commission data. PACs run by Bank of America, Morgan Stanley, UBS, Capital One, Credit Suisse, Wells Fargo, the American Bankers Association, the Mortgage Bankers Association, and CME Group were among the financial services groups that each contributed the legal maximum of $10,000 to Bachus’ campaign over the past two years. Another $10,000 donor: a PAC funded by the National Automotive Dealers Association, which successfully won exemption from regulation by the Consumer Financial Protection Bureau.
Biggert also collected contributions from PACs run by Goldman Sachs, JPMorgan, HSBC, Wells Fargo, Morgan Stanley, CME Group, and the American Bankers Association.
Republicans have made it clear that they intend to scrutinize every move Warren makes to set up the new, powerful consumer protection bureau. When the White House in September appointed her as a special adviser to help launch the agency, Bachus and Darrell Issa of California, a Republican in line to chair the House Oversight and Government Reform Committee, sent a letter demanding to know her specific responsibilities. Warren has few fans among Senate Republicans, either, but the Senate Banking Committee remains in the control of Democrats next year.
Transparency lacking at Treasury?
Bachus and Biggert also criticized the Treasury Dept. and Warren for a lack of transparency about their meetings with lobbyists. Unlike other agencies deeply involved in carrying out the Dodd-Frank reform law, Treasury has yet to create a website page publishing the names and dates of lobbyists’ meeting with department officials. And the new Consumer Financial Protection Bureau – which is funded by a mandated percentage of the Fed’s revenue – has yet to create any kind of website.
Financial Reform Watch assessed the transparency of various financial agencies a few weeks ago with our own Disclosure-O-Meter , and gave an “F” to Treasury’s Office of the Comptroller because of its lack of information. No one from the comptroller’s office – which regulates some of the biggest U.S. banks – bothered to return repeated requests for comment at that time.
Here, once again, is our list of links to where consumers can find out which lobbyists have been meeting with which agencies to discuss the Dodd-Frank law requirements:
- Federal Reserve
- Federal Deposit Insurance Corp.
- Commodity Futures Trading Commission
- Securities and Exchange Commission