Sen. Elizabeth Warren, who rose to prominence in the years immediately after post-crisis as the architect of the Consumer Financial Protection Bureau (CFPB), did not make the cut as Hillary Clinton’s VP.
Warren did, however, meet with President Barack Obama on Saturday to assess the progress of post-crisis Wall Street reform regulation—in particular, the CFPB—in the White House. July 21 marked anniversaries for both the Dodd-Frank Act (six years) and the CFPB (five years).
“The financial crisis wasn’t an unstoppable act of nature,” Warren said. “The whole thing could have been avoided. But we didn’t have rules in place to stop Wall Street from taking enormous risks that threatened the whole economy.”
President Obama added, “Part of passing these strong consumer protections meant passing the first-ever Consumer Financial Protection Bureau, based on an idea that Senator Warren came up with before the crisis even began…Before the Consumer Financial Protection Bureau, you didn’t have a strong ally to turn to if your bank took advantage of you, or if you were being harassed or charged inappropriate fees. Now you do.”
The CFPB launched on July 21, 2011, exactly one year after Obama signed Dodd-Frank into law, as the only government agency whose sole purpose is to protect consumers from predatory practices in financial markets. Warren points to the $11.7 billion in consumer relief handed out to about 27 million families as proof that the CFPB is working for Americans five years into its existence.
The Bureau has not been without its critics in its first five years, however. Republicans have made repeated efforts through legislation to roll back or repeal certain portions of Dodd-Frank; the Republican presidential nominee, Donald Trump, said he wants to eliminate Dodd-Frank altogether.
House Financial Services Committee Chairman Jeb Hensarling (R-Texas) has been one of the most vocal critics of Dodd-Frank, and of the CFPB. In June, Hensarling unveiled the Financial CHOICE Act(Creating Hope and Opportunity for Investors, Consumers, and Entrepreneurs) as an alternative to Dodd-Frank that calls for stronger capitalization rules for banks and at the same time offers regulatory relief for the smaller financial institutions they believe have been adversely affected by Dodd-Frank.
The Financial CHOICE Act also calls for the CFPB to be placed under the Congressional appropriations process and for the Bureau’s director, Richard Cordray, to be replaced with a bipartisan five-member commission.
“The CFPB has an important mission,” Hensarling told DS News in June. “Properly designed and led, it is capable of great good.” At the same time, Hensarling noted that “the CFPB has grown into an unaccountable federal leviathan of more than 1,500 employees with over a half billion dollar budget and the unrestrained power to dictate which Americans can receive credit and which Americans cannot.” He also said the CFPB “by design is not accountable to either Congress or the taxpayers. This defective structure allows the Bureau to evade the checks and balances that apply to virtually every independent regulatory agency, including those responsible for consumer and investor protection.”
In response to the claims made by Republicans who say the economy is weaker, Obama said on Saturday, “Our economy is stronger today than it was before the crisis. Since we dug out from the worst of it, our businesses have added almost 15 million new jobs. Corporate profits are up, lending to businesses is up, and the stock market has hit an all-time high. So the idea that this was bad for business just doesn’t hold water.”
Obama continued, “Whether you’re a Democrat, a Republican, or an Independent, if you’re a hard-working American who plays by the rules, you should expect Wall Street to play by the rules, too, and that’s what we’re fighting for.”