Rahm Emanuel, President Obama's first chief of staff, famously opined that crises presented opportunities for government "to do big things" even in a sharply divided Congress. But when those "big things" aren't backed by a broad political coalition, they may shrink when the crisis goes away.
That's the challenge faced by the Consumer Financial Protection Bureau, a centerpiece of the law passed in the wake of the financial meltdown to tighten oversight of complex financial products and banks. The bureau was designed to take over consumer protection duties that had been parceled out among half a dozen financial industry regulators, which have been more concerned about companies' solvency than their treatment of consumers. It also was empowered to create rules against unfair and deceptive practices by mortgage firms, payday lenders and other "non-bank" financial companies that weren't covered by existing federal regulations.
The absurdly risky subprime mortgages that helped inflate the housing bubble should have made the need for a consumer-focused regulator abundantly clear. But the proposed bureau drew stiff opposition from the financial industry and its allies in Washington, who argued that the added layer of regulation was unnecessary and too costly. The compromise struck by lawmakers placed some unusual constraints on the new bureau: for example, it is the only agency whose rules can be vetoed by another regulatory body (in this case, a panel of financial industry regulators).