Consumer Protection: Attacks will fail on agency targeting risky financial products

Will last week's election blow up the new Consumer Financial Protection Bureau on its launchpad?

That's one key question facing consumers as Republicans - many of them ardent foes of the Dodd-Frank financial law - celebrate their takeover of the House.

Many were especially opposed to an independent bureau, a centerpiece of Dodd-Frank. The question is, what can they do about it?

First proposed by Harvard law professor Elizabeth Warren, the bureau is intended to protect consumers from dangerous financial products, such as "exploding adjustable-rate mortgages," as well as other agencies protect them from unsafe food or exploding toasters. Backers say risky financial products, such as bad mortgages resold to unwitting investors, were building blocks of the financial crisis and collapse.

U.S. Rep. Jeb Hensarling, a Texan who may seek a House leadership role, has voiced particular anger at the role of Warren, who was appointed by President Obama to get the new agency on its feet by next summer, as the law mandates, but was not named as its director, a job that requires Senate confirmation.

Hensarling told Politico last month that if Republicans won, he would seek to de-fund parts of Dodd-Frank. He also said that he was "offended, frankly, that at its core, [the bureau] assaults the liberties of the consumer and will be headed by an unelected and unconfirmed czar or czarina. It's not her personally; it's the position that offends me."

But de-funding the new agency, or going after Warren, may be easier said than done, says Travis Plunkett of the Consumer Federation of America, who says the agency was created because "banking regulators utterly failed to protect consumers from abusive financial practices."

Plunkett says Dodd-Frank specifically protects the new bureau's budget from congressional interference, to insulate it from political winds. And he says both Dodd-Frank and the new bureau are popular among voters.

Plunkett said that he expected tough oversight from key House committees as the bureau launched but that he expected efforts to scuttle it to fail.

"It's one thing to say we've got this vast new law, and we're going to carefully watch its implementation. It's another thing to say we didn't want this new agency, and we're going to do everything we can to handcuff it. That will be a mistake."