WASHINGTON, D.C. — On the same day Sen. Elizabeth Warren (D-Mass.) called on Congress to impose further reforms on the financial sector that go beyond the Dodd-Frank Act, the House of Representatives passed a bill that aims to bring greater transparency to the Dodd-Frank-created Consumer Financial Protection Bureau (CFPB).
Speaking at the Levy Economics Institute’s 24th annual Hyman Minsky Conference on Wednesday, Warren laid out her view of the basic principles the government should follow when regulating financial markets — that “financial institutions shouldn’t be allowed to cheat people” and that “financial institutions shouldn’t be allowed to get the taxpayers to pick up their risks.”
While the Senator acknowledged that the Dodd-Frank Act has made progress on both fronts, she offered several proposals to further regulate financial markets, including lifting the dealer exemption from the Dodd-Frank Act, strengthening legal accountability for big financial firms and senior executives, breaking up the big banks and restricting the Fed’s emergency lending authority, changing the current tax laws that encourage excessive risk-taking and discourage long-term growth, and regulating what she called the “shadow banking sector.”
“The consumer agency’s early results have been good for consumers and good for the economy as a whole, but there’s more to be done,” Warren said of the CFPB, in part. “Right now, the auto loan market looks increasingly like the pre-crisis housing market, with good actors and bad actors mixed together.
“Auto dealers got a specific exemption from CFPB oversight, and it is no coincidence that auto loans are now the most troubled consumer financial product,” she added. “Congress should give the CFPB the authority it needs to supervise car loans …”
Meanwhile, a bill that aims to apply requirements of the Federal Advisory Committee Act (FACA) — a 1972 law designed to ensure that Congress and the public know what’s being discussed in government consumer advisory committees, among other requirements — to the CFPB was passed by a 401-to-two vote. The proposal, dubbed the Bureau Advisory Commission Transparency Act, was introduced in early March by U.S. Rep. Sean Duffy (R-Wis.).
“The bill ensures we as an American family can see what takes place at the CFPB — it makes complete sense,” Duffy said in support of his bill. “This is about making government work; making it accountable and transparent. That should start at these meetings.”
Duffy argued that despite the announcing it would comply with the FACA, the CFPB’s Credit Union and Community Bank Advisory Committees continue to meet behind closed doors.
The National Automobile Dealers Association has made similar arguments in its defense of the indirect auto finance market against the bureau’s targeting of dealer participation. In a recent press release in support of a separate House bill (H.R. 1737) that would rescind the bureau’s March 2013 guidance on dealer participation, the association noted that the CFPB’s lack of transparency prompted 91 member of Congress to request additional information from the agency “on how it arrived at the conclusions it used to justify its guidance bulletin.” The CFPB has yet to respond to that request, the NADA noted.
CFPB Director Richard Cordray has said the FACA does not apply to the bureau. Only the Central Intelligence Agency, the Federal Reserve and the Director of National Intelligence are exempted from the FACA’s provisions.
Duffy’s Bureau Advisory Commission Transparency Act now heads to the U.S. Senate for consideration. “… I think this is about making government work, making it accountable, making it transparent,” Duffy said prior to the House vote on H.R. 1265, “and that should start at least in the advisory meetings that our government takes part in.”