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Consumer bureau headquarters renovation plan gets GOP flak

The $95-million cost of the renovation has become the latest rallying cry for Republicans still trying to restrict the Consumer Financial Protection Bureau's power.

November 29, 2013|By Jim Puzzanghera
  • Richard Cordray, the Consumer Financial Protection Bureau's director, defended the headquarters renovation as “a significant one-time investment.”
Richard Cordray, the Consumer Financial Protection Bureau's director,… (Jim Puzzanghera, Los Angeles…)

WASHINGTON — As they prepared to launch the Consumer Financial Protection Bureau in early 2011, Obama administration officials settled on its permanent headquarters: a vacant government building a block away from the White House.

They planned to turn the former home of the defunct Office of Thrift Supervision into a showplace befitting the first new federal agency created in decades to focus specifically on protecting American consumers.

The 35-year-old building would be renovated to include a state-of-the-art public lobby with "interactive kiosks and 21st century learning centers," Sen. Elizabeth Warren (D-Mass.), then a White House aide who headed the consumer bureau's organizing, said at the time.

But nearly three years later, the bureau's seven-story home remains just another drab concrete-and-glass Washington office building — stuck in the mid-20th century. A handful of posters amid large plants in the lobby tout the bureau's mission and vision. Outside, two simple green-and-white signs feature the agency's name and logo.

The $95-million cost of the renovation has become the latest rallying cry for Republicans still trying to restrict the bureau's power and alter its structure under the 2010 Dodd-Frank financial reform law that created it.

"This is simply an egregious example of waste and Washington bureaucrats living a life much different than an average American," Rep. Patrick McHenry (R-N.C.) said of the renovation costs. "It shows a complete disregard for the taxpayer."

Republicans have long chafed at Dodd-Frank, which nearly all of them opposed. The law left Congress with little say over the functioning of the powerful new bureau, which is funded through the Federal Reserve and does not have to go through the appropriations process.

Richard Cordray, the bureau's director, defended the headquarters renovation as "a significant one-time investment."

"It's not like we're building some palace for the CFPB over the long term," he told senators at a mid-November committee hearing. Noting that the bureau does not own the building, Cordray said: "I would rather not spend a penny on it."

But the electrical, ventilation and other systems needed to be updated, he said. And the bureau, which moved into the building two years ago, still is trying to figure out what restrictions might come from a review of the structure's historic significance.

"It's been a frustrating process for me," Cordray said. "It's taken longer to get to understanding it than I would have liked."

Republicans have focused much of their ire over the law on the bureau's structure and spending, complaining that it is too powerful and lacks proper oversight. They blocked Cordray's confirmation for months, for instance, before Obama installed him using a controversial recess appointment in early 2012.

Last week, over Democratic opposition, McHenry and his Republican colleagues on the House Financial Services Committee pushed through several bills that would change the bureau's structure and powers. They included subjecting the bureau's funding to congressional approval and replacing the single director with a bipartisan commission.

Democrats opposed the changes. They said other banking regulators are funded outside the appropriations process, which prevents Congress from starving them of money at the behest of industry lobbyists.

The Bipartisan Policy Center, a Washington think tank that advocates cooperation and compromise to solve problems, released a broad analysis of the bureau this fall and supported its independent funding stream.

Aaron Klein, director of the center's Financial Regulatory Reform Initiative, pointed out that the Securities and Exchange Commission is funded through the appropriations process and still ran into controversy in 2010 when it signed a 10-year, $556-million lease for new office space in Washington. Congressional Republicans launched an investigation, calling the lease a "fleecing of America."

"It's not clear that appropriations oversight solves questions of operational budget mismanagement, as in the SEC example," said Klein, a former Treasury official in the Obama administration who worked on the Dodd-Frank law. "But it can create the potential for political pressure on the regulatory front."

Despite escaping the appropriations process, the consumer bureau has some limits on its spending. The money it receives each year is capped at 12% of the Fed's operating expenses.

"Every dollar Cordray spends on the building renovation is a dollar less he spends on his mission," Klein said. "That to me is a pretty strong incentive for economization."

Alan S. Kaplinsky, chair of the consumer financial services group at law firm Ballard Spahr, supports some of the Republicans' changes, such as replacing the bureau's director with a bipartisan commission. But he thought the GOP was "barking up the wrong tree" in focusing on the headquarters renovation costs.

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