Consumer Financial Protection Safety and Soundness Improvement Act of 2011

Floor Speech

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Ms. HIRONO. Mr. Chair, I rise in opposition to H.R. 1315, the Consumer Financial Protection Safety and Soundness Improvement Act of 2011.

Today is the first anniversary of the Dodd-Frank Wall Street Reform and Consumer Protection Act. It is also the first official day of work for the Consumer Financial Protection Bureau (CFPB).

For the first time, the United States will have a financial regulator whose sole purpose is to protect consumers. From now on, there will be a cop on the beat watching out for predatory lending practices and unfair fees. Scam artists taking advantage of seniors, young people, and our men and women in uniform will be stopped. And, it will prevent honest businesses from having to compete with unscrupulous ones.

It will help consumers across the country get a fair deal.

I recently spoke with a young man in Hawaii who this agency's work would have helped. He was sold a $700,000 home at age 19. He worked in construction and, at the time, business was booming. He was told by his lender that he qualified for the loan and that everything would be fine. He was inexperienced in purchasing real estate and trusted that the lender had his interests in mind. He was wrong. He no longer has that house, and today that young man's credit is so damaged that it will take him years to rebuild it.

This happened all over the country, and our economy is still reeling. But you wouldn't know that based on the legislation we are considering today. In fact, this bill seeks to limit the independence and effectiveness of the CFPB before it ever gets up and running.

First, it gives the Financial Stability Oversight Council (FSOC), which is primarily made up of the heads of the federal financial regulatory agencies, significant authority to block CFPB regulations. The FSOC's role is for the heads of these agencies to work together to identify and address serious risks to the whole economy--their primary responsibility is not consumer protection. This bill would reduce the threshold of votes required to overturn a CFPB rule from two-thirds to a simple majority and prevent the CFPB's director from voting.

Second, it replaces the single, independent CFPB director with a "collegial'' commission. According to the Committee's report on this bill, such a structure is necessary for a better functioning agency. However, the Committee report fails to point out that the Securities and Exchange Commission, Federal Reserve Board, and other financial regulators are "collegial'' commissions. Before the economic crisis these "collegial'' bodies all had consumer protection responsibilities in their portfolios--but too often, those responsibilities fell to the bottom of the to-do list. The Federal Reserve was given the authority to regulate mortgages in 1994--but it took them 16 years to rein in risky loans.

Last, in a prime example of Washington double-speak the bill prevents the CFPB from taking over the consumer protection authorities of these other agencies until it has a Director. That is odd given that this very bill eliminates the Director position in favor of a commission.

Proponents of this measure say these changes are for the "safety and soundness'' of the financial system. "Safety and soundness'' in this case is really code for "what's good for Wall Street's profitability is good for consumers.''

We all know that's not true.

Congress gave the CFPB sole responsibility for consumers so that other regulators will be able to focus on their primary jobs. The simple fact is that this bill would help reinstate regulatory gridlock and silence the voices of consumers--the opposite of what Dodd-Frank intended.

We have to remember that the cause of the crisis wasn't too much regulation--it was too little. I strongly oppose this legislation, and urge my colleagues to vote against it as well.

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