The White House, former Obama administration officials, and Sen. Elizabeth Warren are criticizing attempts to weaken the Dodd-Frank financial-reform law in House Republicans’ proposed budget, setting the stage for a policy fight that’s only just beginning.
The budget, released on Tuesday, would put the Consumer Financial Protection Bureau under congressional appropriation, which critics say could result in fewer funds for the bureau, since Republicans in Congress would control how much money it receives.
Warren, a Democrat from Massachusetts who served as an assistant in setting up the Consumer Financial Protection Bureau before she ran for Senate, said the House GOP budget could compromise the agency’s independence.
“The consumer agency has put in place strong rules to protect consumers from tricks and traps in financial products,” Warren said in a statement to National Journal Tuesday night. “The big banks don’t like that—and that’s the number one reason the CFPB should remain free of political influence.”
The White House joined Warren in its criticism, saying that putting the bureau under the appropriation of Congress would limit the agency. The administration also criticized the Republicans budget proposal’s “creative-accounting savings” that shift funding for the agency to appropriations.
“In addition, it risks returning us to the days of ‘too big to fail,’ protecting Wall Street firms from important regulatory safeguards and putting ordinary citizens and the economy at risk,” the White House said in a fact sheet Tuesday evening.
Warren and the White House’s united front against the Republican proposal once again shows the complex relationship the Obama administration has with the senator, a progressive favorite. Obama and Warren are at odds about parts of the proposed Trans-Pacific Partnership, but both were supportive of financial reform on Wall Street.
The House budget also would scrap what’s known as the Orderly Liquidation Authority, a provision that gives the Federal Deposit Insurance Corporation, the independent agency created during the Great Depression meant to maintain stability of the U.S. financial system, the power to assume operational and financial control of a troubled financial institution considered systemically important. In that role, it has the responsibility to merge, sell, and manage the institution’s assets, as well provide money necessary to bring an orderly end to the troubled institution.
Republicans say cutting this provision prevents taxpayers from being on the hook for bailouts of financial institutions behaving badly. But the White House struck back on Tuesday, saying, while Republicans claim the budget does not rely on gimmicks or “creative-accounting tricks,” the savings made by getting rid of the provision would be both.
“[The Orderly Liquidation Authority] was enacted to ensure taxpayer funds are never again used to bail out ‘too big to fail’ financial institutions,” the White House fact sheet said.
Michael Barr, a law professor at the University of Michigan who served as the Treasury Department’s assistant secretary for financial institutions, said removing the Orderly Liquidation Authority would reinforce the concept of too-big-to-fail financial institutions.
“One of the key features is giving the government the ability to wind down a firm like Lehman Brothers if it gets in trouble,” he said, referring to one of the institutions whose collapse was part of the 2008 financial crisis.
Republicans have previously used spending bills and other must-sign legislation to weaken parts of Dodd-Frank, knowing it would be difficult for Democrats to vote against them. But in this case, the White House and progressive Democrats like Warren are drawing lines in the sand, vowing to stop major parts of Dodd-Frank from being weakened or repealed.
What We're Following See More »
"Republican megadonor Foster Friess has told party leaders in Wyoming that he plans to run for governor," and is expected to make an announcement this afternoon. Friess has donated "millions of dollars to Republican candidates and causes over the last decade, according to federal campaign finance records," including over "$1.7 million to boost Santorum's [presidential] campaign" in 2016. Gov. Matt Mead (R) is term-limited, and "a handful of Republicans are running in an open primary to succeed him in one of the reddest states in the country."
Four Palestinian protestors have been killed by Israeli fire near the Gaza-Israel border, bringing the death toll to 38, in what marks the "fourth consecutive week of Gaza's March of Return mass protests." The marches are part of a "month-and-a-half-long protest organized by Hamas near the border fence," which organizers have said will not stop before May 15. The marches are intended to emulate anti-apartheid protests in South Africa, and to commemorate the forced expulsion of Palestinians from their homes in 1948, during the establishment of the State of Israel.
"Former Deputy FBI Director Andrew McCabe is looking to sue for defamation, wrongful termination and other possible civil claims, his lawyer told reporters Friday." McCabe's attorney Michael Bromwich said that his team "hasn't managed to find any witnesses to corroborate McCabe's version of the story," although they have not had enough time to do so. "McCabe’s lawyers are also seeking ways to release the emails between McCabe and Comey, which would offer insight into their communication about the leaks to the Wall Street Journal."
"The Democratic National Committee filed a multimillion-dollar lawsuit Friday against the Russian government, the Trump campaign and the WikiLeaks organization alleging a far-reaching conspiracy to disrupt the 2016 campaign and tilt the election to Donald Trump. The complaint, filed in federal district court in Manhattan, alleges that top Trump campaign officials conspired with the Russian government and its military spy agency to hurt Democratic presidential nominee Hillary Clinton and help Trump by hacking the computer networks of the Democratic Party and disseminating stolen material found there." The DNC is seeking "millions of dollars in compensation to offset damage it claims the party suffered from the hacks," and is arguing the cyberattack" undermined its ability to communicate with voters, collect donations and operate effectively as its employees faced personal harassment and, in some cases, death threats."
The Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency have fined Wells Fargo $1 billion dollars for convincing customers to buy insurance they did not need, and could not afford. "In October, the bank revealed that some mortgage borrowers were inappropriately charged for missing a deadline to lock in promised interest rates, even though the delays were Wells Fargo's fault." The bank has also apologized for . "charging as many as 570,000 clients for car insurance they didn't need," and found that about 20,000 of those customers "may have defaulted on their car loans and had their vehicles repossessed in part because of those unnecessary insurance costs."