(Reuters) – U.S. Republican lawmakers are preparing a crackdown on U.S. consumer and securities watchdogs in anticipation of gaining control of a key congressional committee after November’s midterm elections, according to a dozen financial lobbyists, congressional staffers and lawmakers.
With an 80% chance of the House of Representatives shifting to Republican control, according to the website FiveThirtyEight.com, Republicans on the House Financial Services Committee are planning investigations of the Consumer Financial Protection Bureau and the US Securities and Exchange Commission, sources said.
They argue that the agencies, which have operated under Democratic leadership since January 2021, have overstepped their authority, ignored the legal process for writing rules and taken a hostile stance against the industries they regulate.
Democrats say the agencies are only fulfilling their mission to protect investors and consumers.
Republican lawmakers have already begun seeking information and documents from the agencies, according to the sources and public letters, but with control of the House, they will be able to issue investigative subpoenas and compel public testimony.
At the very least, such investigations could soak up hundreds of hours of staff time and make the agencies more vulnerable to private disputes, lobbyists and analysts said.
Key efforts that could be halted or limited include the CFPB’s attempt to limit a range of bank fees and increase competition, and proposed SEC rules on corporate climate risks and the agency’s crackdown on cryptocurrency firms.
“A new day is coming,” Tom Emmer, the top Republican on the House Finance Panel’s Oversight and Investigations Subcommittee, said in an interview, adding that the two agencies are not being held accountable by Democrats. “Once we have the power to sue, once they have to listen to us, aggressive congressional scrutiny will only strengthen our system of government.”
Other prominent Republicans increasing pressure on the agencies, according to public letters and sources, include Rep. Patrick McHenry, who is likely to chair the House Finance Committee if the House flips, and Rep. Blaine Luetkemeyer, also a senior member of the House committee.
A spokesman for Mr. McHenry did not respond to requests for comment. Luetkemeyer’s office was not immediately available for comment.
CFPB Director Rohit Chopra and SEC Chairman Gary Gensler are prime targets because of their ambitious agendas and tough stances, which have drawn opposition from industry groups. The groups have called on Republicans to rein in the agencies and identify issues they believe lawmakers should examine.
The U.S. Chamber of Commerce, for example, has filed public records requests with the CFPB for information on, among other things, its ties to outside policy groups; its enforcement dealings with state prosecutors; and Mr. Chopra’s role in a December bid by Democrats on the Federal Deposit Insurance Corporation’s board to bypass the agency’s then-Republican chairman in a bid to strengthen rules on bank mergers.
The December fracas is likely to be a major focus for Republicans, along with Mr. Chopra’s review of the fees lenders charge on credit cards, overdrafts and bounced checks, Emmer and lobbyists said.
“We will focus on helping what we see as necessary, corrective action by congressional Republicans to investigate the actions of the CFPB,” said Neil Bradley, vice president of the Chamber of Commerce, the nation’s largest trade group.
Mr. Chopra told Reuters last month that he and his staff had met with “hundreds” of financial firms to provide guidance on his thinking and that he hoped to find common ground with Republican lawmakers. “It’s important, regardless of who’s in the seat, that people look for areas where they can work together,” he said in an interview.
Also in Republican sights is a draft SEC rule requiring public companies to disclose climate-related risks, including greenhouse gas emissions, that business groups say is overly burdensome and exceeds the agency’s authority.
That proposal is part of what they and Republican allies characterize as a broad assault on U.S. capital markets by Mr. Gensler, which has followed more than 30 regulations, while giving the industry some time to digest and respond to them.