President Obama’s administration warned on Wednesday that it will recommend the president veto any budget that strips funding from federal bank regulators like the Consumer Financial Protection Bureau. As the budget fight escalates and Republicans tangle with the president on ways to trim billions from the federal budget to prevent the government from defaulting on its debt, the administration’s letter indicating that some cuts are off limits came like a shot across the bow to House Republicans.
Cutting such important agencies “undermines core government functions, investments key to economic growth and job creation, as well as national security,” according to the four-page letter.
Republicans fired back, criticizing the President for defending government spending and his proposal to raise taxes.
“I appreciate the President saying we have to do something about the long term health of our country and entitlements, and I appreciate the fact that he thinks he has some prescriptions to do so.” House Majority Leader Eric Cantor (R-VA) said in a press release. “What I don’t understand is, why in the world the President would then tie that to tax increases.”
Especially important are proposed cuts to the CFPB, which opens its doors July 21. Cutting the bureau’s budget now “would compromise the Bureau’s independence,” and “severely undercut the agency’s statutory responsibility to oversee consumer financial products such as mortgages and credit cards,” according to the administration’s letter.
[Related article: CFPB Hearing: House Panel Civil, But Still Testy]
As the deadline approaches for nominating a director to lead the CFPB, some in Washington have begun to question whether President Obama was still paying attention to the bureau or the many other parts of the Dodd-Frank financial reform law.
“He has just not acted. He hasn’t shown leadership,” Travis Plunkett, lobbyist for the Consumer Federation of America, told Credit.com.
While Obama has not moved to nominate anyone to lead the consumer bureau, Wednesday’s letter shows that Dodd-Frank remains on the administration’s radar. The letter strongly states the administration’s opposition to funding cuts for the IRS and the Treasury department. Cuts to some agencies, like the Securities and Exchange Commission, don’t even make sense in the context of a budget fight, the administration argues, since the agencies (like most banking regulators) don’t get the majority of the budgets from taxpayer funds.
“Limiting SEC’s expenditures does not result in any budgetary savings, since SEC is fully funded by fees on financial transactions,” according to the letter.
[Related article: Frank Defends Embattled Financial Reform Law]
Image: Joe Crimmings, via Flickr.com