Allan Meltzer, author of a new exhaustive history of the Federal Reserve, slammed Congress's recently passed financial reform law for creating an "abomination" in the Consumer Financial Protection Bureau. During a panel discussion at the American Enterprise Institute with former Fed chairman Paul Volcker, Meltzer, who has been critical of federal intervention during the financial crisis, said that the Consumer Financial Protection Bureau was "absolutely not the way to go."
"It should be on the budget if it's going to be a regulatory authority in the Federal Reserve," he said, criticizing the way that CFPB would not be subject to the normal congressional appropriations process. Because the agency would be dealing with the distribution of wealth in this country, "Congress should have a much heavier hand."
This reflects similar criticisms of the CFPB by Texas Republican Rep. Randy Neugebauer, who was just tapped to run the oversight and investigations subcommittee of House Financial Services. Neugebauer recently appeared before a conference of the Consumer Federation of America, which advocated for the agency, to offer his critique that the agency would need more oversight. From National Journal:
“The new Consumer Protection Financial Bureau, however well intentioned, creates another federal agency that is not only duplicative, but has the widest reach into the U.S. economy than any agency in Washington. On top of that, the CFPB’s operating budget is not subject to the appropriations process, so it is insulated from control by Congress,” he said.
He said the House Financial Services Committee under GOP control would carefully oversee implementation of the Dodd-Frank law. “We want to make sure what I believe is a far-reaching process doesn’t become more far reaching,” Neugebauer said to no applause.
Volcker offered no comment about the CFPB, but did note that the Federal Reserve hadn't regulated enough and that regulators do need to intervene when crises arise.