House Appropriations Bill Would Undermine Wall Street Regulation
The House Appropriations Committee has approved a funding bill packed with riders that would roll back financial reform and undermine consumer protection. These ideological policy provisions have no business being added to such a measure. The point of this bill is to set funding levels for a group of agencies and programs. The riders, which include some that were part of the base bill and others that were added as amendments, would seriously weaken oversight of Wall Street and of predatory lenders. By doing so, they threaten the economic security of American families, communities, and businesses.
Among the outrageous and dangerous riders attached to the House version of the Financial Services and General Government (FSGG) appropriations bill are multiple attacks on the Consumer Financial Protection Bureau (CFPB). One rider would strip the CFPB of its independence and transform it into a five-member commission – a recipe for ineffective regulation. Another would end its dedicated funding through the Federal Reserve, subjecting the Bureau to continual political pressure through the annual congressional appropriations process.
A third rider would stall the CFPB’s rule to end the use of forced-arbitration clauses that keep consumers from banding together to hold banks and lending companies accountable in court. A fourth would both delay and impede the CFPB’s ability to rein in the abuses of payday and car-title lending.
The committee also adopted an amendment that would exempt more sellers of manufactured housing from Dodd-Frank provisions intended to safeguard consumers against higher-risk, higher-fee loans. This amendment is both dangerous and unnecessary, given that the rules already provide more flexibility for mortgages on manufactured housing than for other mortgages.
There are many more damaging riders, including one that would prevent the Office of Financial Research (OFR) and the Financial Stability Oversight Council (FSOC) from identifying and regulating dangerous buildups of risk in our financial system, and another that would immunize the directors of a failing financial company from personal liability in connection with bankruptcy cases – a significant change with a large potential for abuse.
In addition, the FSGG bill would cut the budget of the Securities and Exchange Commission (SEC) by $50 million, and cuts its reserve fund by another $50 million. Although this last provision is at least related to appropriations, the SEC is independently funded through a very small fee on Wall Street, so there is no possible advantage to taxpayers in cutting its budget; but there is a very great risk to investors and the public in doing do.
House Appropriations Bill – For more on the problems with riders in the initial text of the FSGG appropriations bill see our June 7 letter to Congress and this joint letter from more than 250 organizations opposing all financial-reform riders.