House Republicans stepped up their criticism of consumer advocate Elizabeth Warren Tuesday afternoon, challenging Warren’s judgment as a special adviser to the new Consumer Financial Protection Bureau (CFPB) and suggesting she lied to Congress in previous testimony.
Rep. Patrick McHenry, R-NC., Chairman of the House Oversight Subcommittee on TARP, called the hearing “Who’s Watching the Watchmen?” and questioned the “veracity” of Warren’s previous testimony in March about her role in settlement talks between federal and state authorities and mortgage companies. He also challenged the “broad discretionary powers” granted to her.
In setting the tone for the highly contentious one- hour hearing, McHenry called the watchdog agency “a super-class of administrative elites” that lacks transparency. Warren, the former Harvard law professor and chief architect of the new agency, denied McHenry’s criticisms and attacks, saying they were “overblown” and “false claims.”
“At the CFPB, we aren’t just talking about transparency and openness; we are living it right now,” she said. As for McHenry’s charge that she lied in her March testimony, Warren said that she had made it clear that she had offered advice to Treasury and Justice Department officials about their investigations of fraud among mortgage-servicing companies and about their settlement discussions with the companies.
Warren, 61, has become a lightning rod for controversy over the new consumer protection agency she is helping to create as a special assistant to the president. The new bureau has been heavily criticized by the financial industry and many congressional Republicans for having too much power over the credit industry.
The New York Times reported today that officials in the Democratic Party are urging Warren to run for the Senate against the Massachusetts Republican Scott P. Brown, instead of continuing to set up the new bureau. A spokesman said that Warren “is 100 percent focused on building the new consumer agency.”
At the heart of today’s dustup was Warren’s role in recommending a $20 billion settlement between mortgage servicers and state attorney generals. In her March testimony she said her agency had provided advice to state officials negotiating a deal with mortgage servicers who falsely foreclosed on homes. However, McHenry accused her of playing a more prominent role in the talks than she acknowledged in March. Warren shot back, “We’ve given our advice when asked and we’ve done so proudly and enthusiastically.”
McHenry pushed further and asked if she would disclose the meetings she had related to the mortgage settlement talks. Warren, a special assistant to the president, replied, ”I believe that my calendar is an open book.”
Asked if she would accept a nomination to take on the role of director at the CFPB, Warren said: “it would not be appropriate for anyone to be speculating.” McHenry pushed again, asking Warren if she has recommended anyone for the director’s post. Before she could finish, he cut her off and moved onto the next question, a maneuver repeated by several Republicans throughout the hearing. One House Republican, Rep. Trey Gowdy, R-S.C., abruptly ended his five minutes of allotted questioning time by saying: “I give up.”
Republicans for weeks have complained that the creation of the agency would burden banks and financial institutions with aggressive new regulations. Last week, the CFPB unveiled two mortgage disclosure forms for public feedback, aimed at simplifying the stack of papers consumers sign at a mortgage closing.
Democrats have supported the watchdog agency and encouraged President Obama to use a recess appointment to make Warren the first director of the consumer protection bureau – an acknowledgement that Warren could not win Senate outright confirmation for the post. The new bureau will officially launch operations on July 21.
The bureau was created under the Dodd-Frank law to protect borrowers against abuses in credit cards, mortgage and other loans. Republicans have opposed the bureau from the outset. They have tried to cut the agency’s budget and dilute its authority by replacing the single director post with a five-member bipartisan panel.
The agency has a $600 million budget cap as outlined by the financial regulation overhaul law or equal to about 1 percent of the amount banks generate from late fees and overdraft fees. Committee members from both sides of the aisle compared the watchdog agency’s regulating authority to David vs. Goliath and asked how Warren would be able to keep up with the enormous banks.
“I believe that the CFPB is well crafted so that we are going to be able to make a significant difference,” Warren said. “We are going to be an effective cop on the beat. About half of our budget will go to supervision and enforcement. We have the capacity to drive toward making the price clear, making risk clear, making it easy for families to compare one product to another.”
Rep. Elijah Cummings, D-Md., was one of the few members on the committee to back Warren and her efforts. “I don’t care what happens in this hearing today, I’m begging you to keep the fire,” he said. “I have constituents who have lost so much and they don’t even know how they lost it. We desperately need you. We need your concern and your passion.”
At the one hour mark of the hearing McHenry got into a ten minute spat with Warren over whether she could be dismissed or not. Warren said they had agreed she would be allowed to leave at 2:15 for another meeting, but McHenry wanted her to stay for more questioning.
“You had no agreement….You’re making this up,” McHenry said. “She is accusing me of making an agreement I never made.”
Democrats on the subcommittee apologized for McHenry’s “rude” behavior. This was Warren’s second appearance on Capitol Hill in two months.
Related Links:
Elizabeth Warren Goes Against House Panel (CNN)
House GOP and Elizabeth Warren Can’t Even Agree over Meeting Time (Talking Points Memo)
Elizabeth Warren Hearing Turns Contentious on All Fronts (Housing Wire)
