U.S. Senator Richard Shelby (R-Ala.), ranking Republican on the Committee on Banking, Housing, and Urban Affairs, along with Sens. Corker, Bond, Johanns, and Murkowski, today held a press conference to discuss the Republican alternative to the Consumer Financial Protection Bureau in the Senate Democrats’ financial regulatory reform bill. Shelby’s remarks at the press conference are below.
Following the press conference, Shelby also released the following statement in response to President Obama’s remarks today that he will “not allow amendments like this one written by Wall Street’s lobbyists to pass for reform” and that “this amendment will significantly weaken consumer protection oversight, includes dangerous carve outs for payday lenders, debt collectors, and other financial services operations, and hurts the ability of community and local banks to compete by creating an unlevel playing field with their non-bank competitors”:
“Main Street business associations across America have written in support of the Republican alternative on consumer protection. They know that the consumer bureau in the Dodd bill is a drastic government overreach that will unduly harm their businesses, who had nothing to do with the financial crisis. In claiming that Wall Street wrote the Republican amendment, President Obama is either intentionally misleading the American people or he is out of touch with the concerns of Main Street businesses throughout our country.”
“However, the Administration is absolutely correct that we do not seek to regulate everyone. The Republican alternative seeks to address the consumer protection deficiencies exposed by the crisis. Unlike the Obama administration, we do not seek to create a massive new bureaucracy to regulate orthodontists, florists, home renovation companies, and other main street businesses.
“The Republican bill provides more resources for consumer protection and requires greater accountability on the part of regulators with consumer protection responsibilities. In addition, the Republican alternative ensures that anyone - banks, mortgage brokers, or payday lenders - who violates the consumer protection laws will receive enhance federal regulation. The Republican alternative doesn’t need carve outs, limitations and exemptions because our legislation is narrowly tailored around those individuals that were the source of the problem.
“The Republican alternative also gives consideration to the safety and soundness of the financial system by making sure that enhanced consumer protection occurs in coordination with enhanced oversight of the banking system. The Obama Administration ignores this important consideration and tracks the failed Fannie and Freddie model that cost taxpayers billions and put millions of homeowners out on the street.
“The Republican alternative solves problems without massive government intrusion into the private sector. The Republican model addresses real problems without creating new ones such as failed banks and more bad loans to consumers.”
Sen. Shelby’s remarks from the press conference:
“Thank you all for coming.
“Yesterday, we introduced an amendment that will enhance consumer protection without endangering the safety and soundness of our community banks or stifling small business development. We are doing this to provide a more rational and constructive alternative to what our Democrat colleagues are trying to slip by the American people.
“The Democrats’ bill will create a massive new bureaucracy whose power and autonomy have no current equivalent anywhere else in the Federal government.
“It can do whatever it wants, whenever it wants, without any supervision or check on its authority.
“In fact, their new Bureau would actually have the authority to trump the safety and soundness regulators, thereby creating instability in our nation’s financial system. This is the same mistake that was made with Fannie Mae and Freddie Mac.
“Our alternative consumer protection division is housed within the FDIC, the original consumer protection agency. Our new division is integrated within the FDIC which has the dual responsibility of safety and soundness as well as consumer protection.
“The Democrats’ new bureaucracy would have enormous reach into Main Street companies like orthodontists, home repair and renovation contractors, and anyone else who extends credit. This is an incredible expansion of the government’s reach without any basis in the current crisis.
“Our new consumer protection division will reach all banks and mortgage originators. It will also have the ability to regulate other non-banks only if they have a pattern and practice of violating consumer laws. Let’s remember, dentists and car dealers had nothing to do with the crisis.
“The Democrats’ bill provides their new bureaucracy with an enormous taxpayer-funded budget (approx. $650 million) without executive or congressional oversight. To give you an idea of how big that is, the Office of the Comptroller of the Currency’s entire annual budget is $750 million.
“Our new division will also have an independent funding source, but it is paid for by those who it regulates, not the taxpayer.
“The Democrats bill also undermines more than a century of precedent on pre-emption with respect to national banks.
“Congress has long sought to create a national financial market and ensure the efficient regulation of national banks. The Democrats bill will virtually undue any semblance of national standards creating significant legal uncertainty and generating unnecessary litigation.
“Our approach maintains the certainty we have established over the last 150 years.
“Finally, the Democrats’ new bureaucracy poses a threat to our privacy. Under Section 1022, the new Bureau would collect any information it chooses from businesses and consumers, including personal characteristics and financial information.
“Individuals could be required to provide the new consumer agency with written answers, under oath, to any question posed by the Bureau regarding their personal financial information.
“The Bureau would have the authority to monitor transactions such as personal deposit account activity, credit card usage, and how much an individual spends on groceries. This is a massive new grant of authority that should give every American pause.
“Our alternative contains no such intrusions into the financial affairs of the American people.
“Once again, our alternative approach enhances the standing of consumer protection without endangering the safety and soundness of our financial institutions.
“It does not overreach into sectors of our economy that had nothing to do with the crisis.
“Our new consumer protection division will have an independent funding source, but it will not be allowed to expand uncontrolled.
“There are no intrusions into the private financial affairs of Americans.
“Finally, it preserves nearly 150 years of federal pre-emption law thereby maintaining market certainty.”