Congressional Republicans also have pushed to replace the board’s single director with a five-member board, and to replace the board’s funding from the Treasury Department–which comes largely from fees charged to financial institutions–with a budget approved by Congress. A group of 44 Republican senators sent a letter to President Obama saying they would block any nominee until they won significant structural changes to the board.
Republicans already succeeded in checking the consumer protection agency by inserting language into Dodd-Frank that submits the new bureau to oversight by a new Financial Stability Oversight Board, comprised of the leaders of all the other federal banking regulatory agencies.
“(T)he Bureau is the only bank regulator whose rules can be overruled by a council made up of other federal agencies,” Warren testified.
But McHenry was not mollified. He questioned Warren at length about her involvement in negotiations between the nation’s largest mortgage servicers and a coalition of state attorneys general, who are investigating the companies for alleged fraud that may have resulted in consumers being illegally evicted from their homes.
After the hearing, when asked by a CNBC reporter whether he thought Warren lied to Congress about the extent of her involvement in the negotiations, McHenry said, “Sure.”
For her part, Warren may not have done herself any favors by refusing to cooperate with McHenry regarding a scheduling conflict. McHenry proposed pausing the hearing for ten minutes so that his subcommittee members could vote on the House floor. Warren responded angrily.
“Congressman, you are causing problems,” Ms. Warren said. “We had an agreement.”
Members of Congress expect a fair degree of deference from the people appearing before them, says Jean Noonan, former associate director of the FTC and now an attorney who focuses on consumer financial issues and a Credit.com columnist. Warren may have crossed that line.
Warren’s objection to waiting ten minutes for the committee to return “comes across as testy and maybe a bit regal, which is pretty fatal before congressional committees,” Noonan says. “I’m sure there was a feeling by Warren of being bullied and pushed too far, but that’s never good to have it come out in public.”
Then again, McHenry crossed a line by calling Warren a liar and using his subcommittee’s oversight power to try and discredit the consumer board, says Plunkett of the Consumer Federation of America.
“I’d call this thug oversight,” Plunkett says. “Thug oversight is characterized by attempts to make accusations, to slander, to taint, to not give a witness much time to respond, and then to try and taint their responses as not just wrong but somehow lacking in veracity.”
None of this bodes well for efforts by moderates to find some way out of this impasse. Representative Barney Frank (D-MA), a 30-year veteran of Congress, called the Republicans’ treatment of Warren “the worst abuse of the confirmation process I’ve ever seen” in an interview with The Hill newspaper. Rep. Al Franken sent a letter to President Obama, asking the administration to go over Republicans’ heads and make a recess appointment of Warren to lead the agency.
“I think what all of this shows is an unwillingness on either side to compromise,” Noonan says. “Between Warren and the Republicans, they both seem more willing to escalate the rhetoric than to tamp it down.”