WASHINGTON - Republicans in the U.S. House of Representatives marked the anniversary of the 2010 financial oversight law on Thursday by passing legislation aimed at scaling back the powers of the new Consumer Financial Protection Bureau.
The bureau, which opened for business on Thursday, is a key aspect of the law and one of its most contentious.
The legislation, passed by a 241 to 173 vote, would have the bureau run by a five-member board rather than a single director and make it easier for the new Financial Stability Oversight Council to overturn bureau regulations.
It has almost no chance of becoming law because of opposition from Democrats who control the Senate and because of a promise from the White House to veto the measure, but it highlights the partisan tensions over the CFPB.
The agency has been a sore point for Republicans and the banking industry, who have portrayed it as an unnecessary layer of regulation that, if overzealous, could restrict consumer choice and lending.
Democrats have championed the bureau, which will police products like mortgages and credit cards, as a singular reform that establishes a "cop on the beat" to protect consumer interests against the banking and lending industry.
Republicans said their bill's proposed changes are not radical and will put needed checks on the agency.
House Financial Services Chairman Spencer Bachus said the board approach is used for other agencies and that under the law an "unaccountable czar" will call the shots for CFPB.
"I wouldn't want George Washington, I wouldn't want Abraham Lincoln, I wouldn't want Mother Theresa to have that kind of power," Bachus said.
Democrats dismissed these arguments as disingenuous and said Republicans' true intent is to slowly bleed the agency to death.
"The public does not think that the poor banks need to be protected against these rapacious consumers," said Congressman Barney Frank, one of the law's primary authors. "This particular bill is a proxy for what they (Republicans) really want to do, abolishing the whole agency."
The bureau is currently leaderless but earlier this week President Obama nominated former Ohio Attorney General Richard Cordray to be its first director.
Senate Republicans, however, are threatening to block the pick unless Democrats agree to change how the bureau is funded, have it run by a board and give FSOC more say over CFPB rules.
There is no compromise in sight, leading to speculation the president will use his authority to place Cordray in the job when the Senate goes on a break in August.
Under this scenario Cordray could only serve in the job for about 1-1/2 years instead of a full five-year term.
© 2014 Thomson/Reuters. All rights reserved.