Mr. Chair, I thank Mr. Womack, chairman of the Financial Services and General Government Subcommittee, not only for his leadership but his rabid support of the Razorbacks. Kentucky and Arkansas have a big rivalry in basketball, but in this…
Mr. Chair, I thank Mr. Womack, chairman of the Financial Services and General Government Subcommittee, not only for his leadership but his rabid support of the Razorbacks. Kentucky and Arkansas have a big rivalry in basketball, but in this case we are on the same page because the chairman has rightly included in this year's FSGG appropriations bill my legislation, H.R. 1382, the Taking Account of Bureaucrats' Spending Act, or the TABS Act, which would separate the Consumer Financial Protection Bureau from the Federal Reserve System, make it an independent agency and subject it, importantly, to the congressional appropriations process.
The TABS Act would remedy the serious constitutional defect in the structure of the CFPB as established by the Dodd-Frank Act under which the CFPB draws its funding uniquely from the Federal Reserve instead of from Congress, like most other executive branch agencies. Specifically, Dodd-Frank delegates to the Director of the CFPB the unilateral power to decide in perpetuity how much money he wants for the agency to carry out its broad and potent regulatory and enforcement powers.
The Director then requests such amount from the Fed, which is itself exempt from the congressional appropriations process, making it double insulated from accountability. The Fed is then required to provide such amount to the Bureau, no questions asked. This is a constitutional aberration, and it is a violation of the separation of powers.
Although the total amount the Director can request is capped in the law, the cap is so high that it effectively grants the CFPB Director unfettered discretion over the Bureau's amount of funding and how it is spent. No other Federal agency in the entire Federal bureaucracy is funded in this manner. Indeed, there is no analogue for the CFPB anywhere in the history of the U.S. executive branch.
Even among self-funded agencies, the Bureau is unique. It is a perpetual self-directed, double-insulated funding structure that goes a significant step further than that enjoyed by any other agency, again, in the history of our Republic.
The TABS Act would fix this. It would bring much-needed accountability to the CFPB and uphold the Constitution's separation of powers and the exclusive grants of the appropriations power to Congress.
I want to make a couple of points about the TABS Act. First, the purpose of this bill is not to repeal or undermine consumer protection laws. Rather, the purpose is to address the constitutional defect in the CFPB's funding structure. No one is objecting to the utility of some Federal consumer protections, but we should also agree that the Constitution reserves to Congress the sole authority to set funding limits for the CFPB and other executive branch agencies.
I note that the FY24 FSGG bill would fund the CFPB at near current levels. I also note that H.R. 2798, the CFPB Transparency and Accountability Reform Act, which was marked up out of the Financial Services Committee on April 26, included the TABS Act, and authorized to be appropriated from unobligated amounts contained in the Consumer Financial Civil Penalty Fund $650 million for FY24--again, at levels comparable to what the CFPB received from the Fed this year.
My friends on the other side of the aisle can't make the argument that we are trying to defund the agency, that we are trying to gut consumer protection laws because we are manifestly proving we are not doing that. We are funding the agency the way it should be. This clearly demonstrates that the TABS Act is not about eliminating consumer protections or the CFPB, but it is about upholding the Constitution. It is about defending the Congress, this institution.
If this bill is enacted into law, the Bureau would continue to operate. The only difference would be that the Congress would oversee their spending in the same way it does for all other consumer protection agencies in most of the rest of the Federal Government.
As you know, the Supreme Court recently heard the case of Community Financial Services Association of America v. CFPB in which the agency's funding structure was challenged as violating the Constitution's separation of powers and the appropriations clause, which provides that: ``No money shall be drawn from the Treasury, but in Consequence of Appropriations made by law . . . ''
If the Supreme Court strikes down the CFPB's funding structure, as it should in this case, this bill will ensure that the agency continues to operate.
Following such a decision by the Court, chaos would not ensue, as some have suggested, nor would there be great uncertainty in the marketplace about the status of consumer protection laws and regulations.
On the contrary, this legislation demonstrates that Congress is prepared to assert its appropriations power to stabilize preexisting consumer laws and make sure that the CFPB is funded with better and more meaningful oversight in the event that the Supreme Court strikes down the funding mechanism.
The Founding Fathers wanted to make sure that the legislative branch--the people's elected Representatives in Congress--make the key decisions about our government, especially how tax dollars are spent.
As Madison wrote in Federalist Paper No. 58: ``This power over the purse may, in fact, be regarded as the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people, for obtaining a redress of every grievance, and for carrying into effect every just and salutary measure.''
This is a sound principle, which in the context of the CFPB or any other executive branch agency, every member of Congress, Republican and Democrat, should defend.
This is not a partisan issue. This is about defending this institution and our power of the purse. I ask my friends on the other side of the aisle: If Congress passed legislation funding the Department of Defense or the CIA in the same manner as the CFPB is currently funded, would that be acceptable? Would we want those agencies to be completely unaccountable to our oversight?
The appropriations process is the primary means by which Congress, on a bipartisan basis, oversees those agencies, as well as all consumer protection agencies.
Now, some will say that Congress can change the CFPB's funding structure at any time so there is really no problem with the structure. Well, this is ridiculous. This is absurd.
Our Constitution does not permit elected Representatives in Congress to delegate away our authority, which is textually reserved to the Congress, to some other branch of government or an executive branch official. It requires that the key decisions remain in the hands of the elected Representatives of the people.
Congress cannot delegate away its responsibilities without undermining the separation of powers, even if it could pass legislation to retake such responsibilities in the future.
Instead, it is the Supreme Court's duty to strike down laws that violate
the Constitution, even if Congress could remedy those violations. For example, the Supreme Court strikes down laws that violate the First Amendment or the Commerce Clause, even though Congress could remedy those violations. There is no reason why the same should not be true of laws that violate the appropriations clause.
Moreover, in Seila Law, the Court struck down the infringement of the President's removal power over the director of the CFPB. I hope now it protects Congress' power as it did the President's power in Seila Law.
After all, the Supreme Court's role is not just to prevent the erosion of presidential powers but also Congress' power. The reason the CFPB's funding structure is so problematic is that when Congress delegates its core responsibilities away to administrative agencies, the value of each American's vote is diminished.
As Congress has delegated more responsibilities and more authorities to administrative agencies, Americans have come to increasingly believe that their votes do not matter. They see that changes in Congress don't change policies set by agencies.
Lack of congressional control over the CFPB creates the opportunity for special interests to capture the CFPB who run the agency according to their own ideological vision, not according to the will of the American people. Changing the CFPB's funding structure would be an important and commonsense step in restoring faith in our democracy.
It is important to recognize that the structure of the CFPB is an aberration in our government. No other agency is funded by the Federal Reserve at the level set by the director of the other agency.
Now, I know a lot of people have raised concerns that striking down the funding structure of the bureau would open up the question of constitutionality of the Federal Reserve and a few other agencies that are funded through assessments or other funding streams that they incur in their operations.
The funding structure of the CFPB is unique. Unlike other agencies that may be funded by a specific source of funding that they raise in the course of their operations--seigniorage in the case of the Federal Reserve; fees on banks in the case of the Comptroller of the Currency; deposit insurance premiums in the case of the Federal Deposit Insurance Corporation; tariff revenue in the case of the Customs Service--the CFPB is different. There is no analog. It determines its own funding by taking funds from the Federal Reserve. No other agency obtains its funding by taking funds in this way. Further, there is no nexus between its statutory responsibilities, consumer protection, and its funding source, the Federal Reserve.
In conclusion, while there has been much debate about where to draw the constitutional line on how agencies can be funded consistent with the appropriations clause, the funding structure of the CFPB is one we should all agree goes too far.
As with the Supreme Court determination in the Free Enterprise Fund case that double insulation on removal was too far with respect to limits on the presidential removal authority, the same should apply here.
The funding structure of the CFPB goes too far without having to answer or raise questions about other agencies. Granting Federal agencies the authority to derive their funding from the Federal Reserve outside of the appropriations process is a dangerous precedent and is fundamentally inconsistent with the Constitution's separation of powers.
The Federal Reserve seigniorage for money creation is not a piggy bank. Forcing the Federal Reserve to pay for other government operations risks compromising the Fed's monetary policy independence.
For these reasons, I urge the Supreme Court of the United States to do the right thing: to vindicate the separation of powers and to uphold Congress' appropriations authority over Federal executive branch agencies.
I urge my colleagues to remedy this constitutional defect, pass the Womack appropriations bill, pass the TABS Act, and restore congressional appropriations authority.
Mr. Chairman, I will be brief in response to my friend, the gentleman from Maryland, who makes the arguments that the authors of the Dodd-Frank law made, which was that we designed this to be independent. Well, that is fine. That is what they wanted, but they can't do it unconstitutionally.
As the Fifth Circuit said very, very well, while the defenders of the structure of the agency, of the CFPB, contend that there is no constitutional infirmity because the funding scheme was actually enacted by Congress in the Dodd-Frank law, and, therefore, it is constitutional.
In essence, the bureau contends that because Congress spun the agency's funding mechanism into motion when it passed the act, voila, the appropriations clause is satisfied.
That is not the way the Constitution works, Mr. Chair. This body cannot unconstitutionally delegate away our most fundamental power, which is the power of the purse.
Vote for the Womack appropriations bill. Restore the power of the purse. Defend this institution.
Mr. Chair, I thank my friend from Pennsylvania, and I compliment and applaud him for introducing a very legitimate amendment to address the unconstitutional structure of the agency and the fact that they are a rogue agency.
There is no greater critic of the CFPB than me. Ask Mr. Chopra about that. However, I reluctantly rise in opposition, which may surprise my colleagues on the other side of the aisle, to the amendment. It is not because the agency doesn't deserve a check the way Mr. Perry wants but because it is important for this institution that we assert, in the long run, the appropriations power of this body. That is why I support the Womack bill, which funds the agency and deprives the Court of the excuse to uphold the agency.
Mr. Chair, I have an amendment at the desk.
Mr. Chairman, my amendment would prohibit the Treasury Department from issuing General License No. 8H, which was issued by the Office of Foreign Asset Control on October 25.
It represents a fundamental policy shift in our approach to Russia and ending its aggression against Ukraine. This amendment is a recognition that the Biden Treasury Department's Russian oil price cap policy has failed. It is not curbing Moscow's war spending because the cap has proven unenforceable, especially outside of the G7.
Russian oil is trading well above the cap, funneling billions of dollars and, in fact, trillions of rubles into Putin's war machine.
It is also a recognition that President Biden and Climate Czar John Kerry's climate agenda and war on American energy has come in direct conflict with our national security and our efforts to counter Russian aggression. Their climate policies have limited the tools available to them and pushed our country into pursuing a woefully ineffective price cap strategy in lieu of closing the huge loophole they created for energy-related transactions in their sanctions on Russian banks.
That is right. For the Americans watching on television who have been given the impression that President Biden is being tough on Moscow, the truth is, they are allowing oil sales to finance the war. That is the Biden policy, to create a huge loophole for energy-related transactions that allows Putin to finance this war.
License number 8H is an extension of authorizations by this administration going back to the very start of the war in Ukraine. It permits U.S. persons to engage in any transaction with sanctioned Russian financial institutions if the transaction involves Russian energy. This is the Biden administration's weak policy toward Russia.
It includes not only Russian energy sales but even production, refinement,
and transport. Despite sanctions, again, on Russia's leading banks, including restrictions on the Central Bank, OFAC licensing has exempted dealings that support the most vital source of export earnings for Moscow.
Why this administration punishes American energy but rewards Putin's energy is beyond comprehension. This is simply perverse. On the one hand, the Biden administration is greenlighting Russia's efforts to earn hard currency for its war machine even as it asks Congress for billions of dollars to defend and reconstruct Ukraine. The left hand destroys while the right hand rebuilds, but somehow the administration is stumped that this war grinds on without end.
Had Biden continued the Trump administration's energy dominance strategy, he would not be as constrained as he is today, and global energy markets would be far less dependent on Russian oil and gas, making a full embargo or sanctions without a general license far less painful for us and our allies.
My amendment says enough is enough. If we really want to help the Ukrainian freedom fighters, we have to end Russia's ability to wage war. That means cutting off every avenue available for it to fund its hostilities.
As The Wall Street Journal reported just this week, Russian tax revenues for oil and gas surpassed $17 billion last month, an increase of 25 percent from the previous year. These revenues are bolstering Moscow's abilities to threaten Ukraine with the government planning to increase military spending by 70 percent next year.
Under my amendment, the United States will not be complicit in these energy sales. It will ensure that sanctioned Russian banks are, in fact, sanctioned. The loopholes that Russia has enjoyed for over a year, thanks to President Biden, will be closed, and we will send a signal to the world that turning a blind eye to Russian exports is over.
At the same time, passage of this amendment must be viewed in the broader context of the administration's multilateral efforts to ensure the continued supply of Russian energy.
Even if we close off the U.S. and its financial system from these transactions, the Treasury Department has convinced our European allies to roll back EU sanctions under a price cap scheme for oil. Treasury's own data has shown that the price cap still allows Russia to earn billions of dollars each month in oil sales. Moreover, with Urals crude prices rising, the World Bank recently concluded that the price cap ``appears increasingly unenforceable.''
The only way to counteract this trend will be to acknowledge once and for all that the war in Ukraine will not end until Russian energy dries up. That means enforcing sanctions, not rolling them back. The first place to start is here at home with OFAC licensing.
My amendment is an important step toward this goal. If you want to get tough on Putin, stop his energy exports.
Mr. Chair, I urge my colleagues to support this measure and bring energy dominance back to the United States.
Mr. Chair, I appreciate the sentiment, and I am with Mr. Hoyer on providing support for Ukraine, but the 8H license is actually the loophole. It is the exception to the sanctions.
I give President Biden credit and Secretary Yellen credit and Wally Adeyemo credit for the sanctions on Russian banks and the Central Bank. The problem is the huge loophole they have created with the general license.
What my amendment proposes to do--and I just came from a meeting with Deputy Treasury Secretary Adeyemo, a great patriot--but what we are trying to say is the price cap is not working; close the loophole, sanction Russian energy exports. I offer that as a bipartisan amendment.
Mr. Chair, to answer the question, that is a very good question. That is the key question.
To the administration's credit, they are trying to solve this difficult question: How do we impose sanctions on Russia and Putin without hurting our allies?
And us, because unfortunately our allies are overdependent on Russian sources of energy.
The problem is because of this price cap scheme that they have concocted, Russian oil is trading above the cap, so it is not exactly affecting anything.
The truth is, there are two solutions. Number one is to decrease our and our allies' dependence on Russian gas by increasing our own production. This is where the administration's climate agenda is in conflict with our national security.
Secondly, the general license is the problem. If they repealed the general license and did what Treasury does all the time on sanctions and to help our allies in case-by-case scenarios with a special license--let's say, for Germany in a particular case, okay, that is fine; they retain that authority, Treasury would--but a general license that says Putin can sell all of his energy with no ramifications whatsoever through a general license is not tough on Russia.
Mr. Chair, I demand a recorded vote.
Mr. Chair, I have an amendment at the desk.
Mr. Chair, my amendment prohibits funds from being used to implement the Biden administration's January 2021 executive order titled ``Tackling the Climate Crisis at Home and Abroad.''
The Biden administration issued this executive order under the guise of protecting United States' national security and foreign policy, yet Republicans see right through this.
This executive order is yet another example of the Biden administration's effort to circumvent the people's House and advance their radical anti-American energy agenda by depriving the energy industry of the financing it needs from our capital markets.
Perhaps if we want to work in our national security interests, Mr. Chair, we should bring energy independence and dominance back to the United States by promoting, not working to prevent, the financing of the very capital-intensive energy sector.
We should block misguided ESG initiatives where the ultimate goal is to politicize the allocation of capital and steer investments into the Democrats' desired climate transition. To protect national security interests, we should pass H.R. 1 and unleash American energy not just for our economy but for our national security.
Instead, unsurprisingly, the Biden administration releases this executive order that calls for the U.S. to rejoin the Paris Agreement, creates a National Climate Task Force consisting of members from multiple Federal agencies, including the Secretary of the Treasury and the Secretary of Defense, which will result in agencies taking their eye off the ball of real systemic risks in our financial system and global stability to focus on political initiatives and calls for a government-wide approach to the climate crisis.
What might be the most egregious is the executive order's call to tamper with financial flows to align with a pathway toward low greenhouse gas emissions and climate-resilient development. The Biden administration is calling for the government to put its thumb on the scale of free-flowing capital, pick winners and losers, and pursue an agenda to starve energy companies of the financing that they need and redirect capital into speculative green energy technologies that, frankly, are unproven and will not actually fix the climate.
This is in direct contradiction with our national security interests, increases our energy dependence on our adversaries, and is once again showing us Democrats are exploiting the most envied capital system in the world to pursue their most radical and detrimental agendas. My amendment will put a stop to this.
Mr. Chair, I urge my colleagues, for the interest of our economy but also for the interests of national security, to support this amendment, and I yield back the balance of my time.