Federal legislation following Wall Street's collapse created a new consumer protection agency, but banking and investment interests seem determined to keep the watchdog from even taking a walk.
The Consumer Financial Protection Bureau is being thwarted by efforts to reduce its effectiveness. First, opponents blocked Harvard law professor Elizabeth Warren, whose ideas birthed the agency, from being appointed its director. Now, CFPB foes, including Sen. Pat Toomey (R., Pa.), are trying to prevent the appointment of her top lieutenant, Richard Cordray, to the head post unless the agency is further weakened.
Some of the same investment interests that sold the exotic financial instruments that paved the way to a consumer-credit crisis don't want the CFPB to have broad powers, including supervising lenders, simplifying mortgage documents, and probing credit-card agreements for hidden fees.
In a mostly party-line vote, the Republican-controlled House passed a bill last week making it easier to overturn the mortgage, credit-card, and other regulations aimed at protecting consumers.
For good measure, they threw another layer of bureaucracy on top of the CFPB, which is already required by law to report to Congress and the federal Financial Stability Oversight Council.
It is disappointing that among those voting to muzzle the new consumer watchdog were Republican House members Jim Gerlach, Pat Meehan, and Mike Fitzpatrick of Pennsylvania, and Jon Runyan, Chris Smith, and Frank LoBiondo of New Jersey.
All but Smith have received more campaign money from lending-industry groups than they have from the consumer, labor, and civil-rights groups that want the CFPB to be a robust advocate, according to an analysis by the nonpartisan MAPLight.org.
But it won't be very long before the area House members will be hitting the campaign trail seeking reelection. They will have to explain to voters why they are trying to leash an agency that protects consumers.
Elected representatives are supposed to stand with the individual voters who put them in office, not pledge allegiance to big-money institutions that may be providing the bulk of their campaign cash.
It has been a year since President Obama signed the Dodd-Frank law, which is supposed to lead to better regulation of banking and investment firms. The CFPB is supposed to be one of the crown jewels of the financial reforms. But it will be as useless as a rock if its detractors keep chipping away at its powers before the agency can gain traction.