Consumer Financial Protection Bureau Director Richard Cordray testifies… (J. Scott Applewhite / Associated…)
Reporting from Washington — House Republicans on Wednesday criticized spending by the Consumer Financial Protection Bureau, whose budget will increase by 26% in 2013 to $448 million, saying lawmakers have no say over how the agency doles out the money.
“If they spend $100 million on paper clips, we can’t even say, 'Wait a minute, you can’t do that.' Next year we’re going to cut their budget,” said House Financial Services Committee Chairman Spencer Bachus (R-Ala.). “We have absolutely no control.”
The committee summoned the agency’s newly installed director, Richard Cordray, to a hearing on the agency's spending plans for 2013 and criticized some of the salaries it has been paying and, more broadly, what they said was a lack of detail on its budget.
Under the 2010 financial reform law, the agency doesn’t get its money through the congressional appropriations process. Instead, the money comes from a separate, dedicated funding stream from the Federal Reserve’s coffers.
The Obama administration and congressional Democrats pushed for the unusual funding mechanism to prevent lawmakers from starving it of funds, as happened with the former regulator for Fannie Mae and Freddie Mac.
"The appropriations process oftentimes can become very political," said Rep. Carolyn Maloney (D-N.Y.). "It could be it would result in significant cuts in your ability to help people."
Cordray and supporters of the agency noted that other banking regulators, including the Office of the Comptroller of the Currency, also are not funded through the appropriations process. Cordray said that unlike the other banking agencies, the consumer bureau's budget is capped under law and that its spending hasn't come close to that cap.
Cordray estimated that the bureau would spend $356 million this year, well below its legal cap of $548 million, and will spend $447 million in 2013, below a $598-million cap.
"Our budget is smaller than other banking agencies," Cordray said.
Republicans have targeted the consumer bureau's funding to highlight its power and have proposed legislation to remove the independent funding stream. Rep. Randy Neugebauer (R-Texas) criticized the agency for providing just 12 pages of details on its 2012 budget, much less than other agencies that come before Congress.
Cordray said that the budget documents were doubled to 25 pages for the agency's proposed 2013 spending and promised there would be more details in coming years. Rep. Brad Miller (D-N.C.) noted that the Office of the Comptroller of the Currency provided 23 pages of budget documents for more than $1 billion in 2013 spending.
Rep. Bill Posey (R-Fla.) grilled Cordray on salaries at the bureau, citing findings by watchdog group Judicial Watch that an intern was earning $42,000 annually and an associate director for consumer education was earning $251,000 a year. Such high salaries were unjustified, he said.
Cordray said that Congress sets the salary levels for the agency and that they are comparable to other banking agencies, which must compete to get people skilled enough to oversee the complex financial industry. The consumer bureau's average salary is 4% below the average salary at the Federal Reserve, he said.