House Republicans on Wednesday blocked Democratic efforts to preserve the independence of a consumer watchdog created after the 2008 economic meltdown as the GOP pressed ahead with an overhaul of the nation's financial regulatory law.
On the second day of a contentious, marathon session, the GOP-led Financial Services Committee rebuffed the Democratic attempts to protect the Consumer Financial Protection Bureau, the five-year-old agency which enforces consumer protection laws and scrutinizes the practices of virtually any business selling financial products and services. That ranges from credit card companies to mortgage services to auto lenders.
"When we wrote Dodd-Frank, we wanted the bureau to be above the fray so that it could focus solely on its mission of protecting consumers," said Rep. Nydia Velazquez, D-N.Y., author of an amendment seeking to keep the bureau's funding with the Federal Reserve instead of Congress.
Republicans complained that Congress has too little say over how the bureau operates.
"It's about checks and balances," said Rep. Jeb Hensarling, R-Texas, the chairman of the Financial Services Committee. "This is part of what we do."
The panel defeated the amendment on a 32-24 vote.
Democrats also tried to preserve a new federal rule targeting consumers' retirement investments and the advice they receive from financial professionals. The Republican overhaul bill would repeal a Labor Department rule requiring brokers who recommend investments for retirement savers to meet the stricter standard that applies to registered advisers: They must act as "fiduciaries" — trustees who are obliged to put their clients' best interests above all.
In lengthy debate, Republicans on the panel said the rule, which hasn't yet taken effect, would strip individual investors of choices for their retirement savings.
House Republicans are working to undo much of the 2010 Dodd-Frank law that put the stiffest restrictions on banks and Wall Street since the 1930s Depression. The law signed by Democrat Barack Obama was in response to the Great Recession that pushed the economy to the brink of collapse.
Republicans are likely to pass the measure in the House. But the bill faces significant obstacles in the Senate, where leaders have emphasized their desire to find areas of agreement to enhance economic growth. Democratic lawmakers predicted that at the end of the process, the bill would not become law despite an ally in the White House — President Donald Trump.
The president has said Dodd-Frank is "out of control."
Soon after taking office, Trump ordered the Labor Department to delay implementing the fiduciary rule. The delay gave the administration a chance to rethink the rule and to revise or eliminate it.
The rule is intended to prevent investment professionals from steering clients toward high-commission investments that might not be in the clients' best interests. Trump asked the Labor Department to determine whether the rule would likely hurt ordinary investors by reducing their access to some retirement savings products.
The new Republican bill would give the Securities and Exchange Commission, rather than the Labor Department, the authority to issue a rule on fiduciary standards of conduct for brokers and investment advisers. The SEC may be expected to take a more lenient stance toward the financial industry.
Rep. Blaine Luetkemeyer, R-Mo., said the fiduciary rule is a slap in the face to the integrity of investment advisers. "If they don't give good advice, they're not going to be in business very long," he said.
The panel also defeated an amendment from Rep. Carolyn Maloney, D-N.Y., that would preserve the consumer bureau's authority to go after companies for unfair or deceptive actions, such as the opening of accounts without a consumer's consent. That practice led the agency to fine Wells Fargo $100 million for illegally opening accounts for their customers in order to meet aggressive sales goals.
The panel will continue working through the proposed replacement bill for the Dodd-Frank law on Wednesday and possibly into Thursday.
AP Business Writer Marcy Gordon contributed to this report.