May 24, 2011

Warren Grilling Is Shameful

Statement of David Arkush, Director, Public Citizen’s Congress Watch Division

Today Rep. Patrick McHenry (R-N.C.) will waste taxpayer money on a hearing that apparently has no purpose but to harass professor Elizabeth Warren and hamper the Consumer Financial Protection Bureau’s (CFPB) efforts to protect Americans from abuses in the financial sector.

Politico released a leaked version of Rep. McHenry’s opening statement this morning. He should be ashamed. The opening statement suggests a concern for the “veracity” of professor Warren’s earlier statement that she is only giving “advice” in settlement negotiations over widespread mortgage fraud. His evidence of purported untruthfulness is that professor Warren has attended “dozens of meetings … about these settlements” and that the CFPB prepared a seven-page Power Point presentation entitled “Perspectives on Settlement Alternatives in Mortgage Servicing.” Attending meetings and producing a Power Point slideshow are not inconsistent with giving “advice.” In fact, one wonders how effectively professor Warren, who was tasked with getting the new agency up and running, could advise negotiators without attending any meetings or committing any thoughts to paper.

Further, Rep. McHenry’s opening statement includes falsehoods about the CFPB. He writes, for example, that the bureau will have “virtually unchecked discretion” to identify products and services that are unfair, deceptive or abusive. But in addition to Congress’ “check” on the CFPB – Congress can pass legislation altering or even abolishing the agency at any time – the bureau suffers from an unprecedented lack of discretion: It can be overruled by other financial regulators.

Rep. McHenry also says that the CFPB’s “budgetary authority” is “unparalleled” because the agency’s budget derives from the Federal Reserve rather than congressional appropriations. It is comically false to call the absence of annual appropriations “unparalleled” when the Federal Reserve’s budget isn’t appropriated by Congress either.

Rep. McHenry would do better to represent his constituents, not the financial interests that fund his campaigns. His top contributor, according to the Center for Responsive Politics, is Wells Fargo. The list of his top 20 contributors also includes the American Bankers Association, Bank of America and the National Association of Realtors.