Report criticizes lawmakers who challenged consumer watchdog’s funding; took campaign money from industries it regulates

Editors note: the following story has been published with permission from the Wisconsin Examiner. The publication’s website is here: https://wisconsinexaminer.com. 

By Erik Gunn/Wisconsin Examiner

Two Wisconsin members of Congress are among 22 Republicans singled out in a new report for backing a lawsuit to defund a federal consumer watchdog agency while taking financial contributions from businesses the agency regulates.

U.S. Reps. Bryan Steil (R-Janesville) and Scott Fitzgerald (R-Juneau) signed on to a friend of the court brief filed by 132 members of Congress in July in a lawsuit to kill the current funding mechanism for the Consumer Financial Protection Bureau (CFPB). The brief sides with a trade group for the payday lending industry in the case, which the U.S. Supreme Court will hear this fall.

Steil and Fitzgerald have benefited from campaign donations from industries regulated by the bureau, according to Accountable.US, a nonprofit that focuses on corporate influence in politics and government that the organization contends blunts progressive law and policy. 

Accountable.US issued a report August 9 that focuses on nearly two dozen signers of the letter in 10 states and their campaign contributions from industries under CFPB regulation. 

The report states the CFPB has helped more than 22,000 Wisconsin residents, who have recovered $7.3 million through the agency’s enforcement actions between 2012 and 2022.

The report says that the 132 members of Congress who signed on to the payday loan industry’s brief have collectively received $51 million from industries regulated by the bureau. 

“Republicans in Congress should be celebrating the fact [that] the Consumer Financial Protection Bureau has recouped billions of dollars for families who’ve been ripped off by bad actors in the financial industry,” said Liz Zelnick, director of the organization’s economic security and corporate power research. 

She accused the congressional Republicans who signed the letter, including Fitzgerald and Steil, of “rooting for efforts to defund and defang the nation’s top consumer advocate after they’ve taken millions of dollars from greedy big banks to predatory lenders that want no consumer protections at all.”

During his congressional career, Steil, first elected in 2018, has collected $1.2 million from financial industries regulated by the bureau, Accountable.US reports, citing data compiled by the nonpartisan campaign finance monitoring organization OpenSecrets.org. Those contributors include commercial banks, the securities and investment industry and finance and credit companies.

Fitzgerald, first elected in 2020, has collected $98,000 from CFBP-regulated industries, including commercial banks and the automotive industry. The bureau’s regulatory authority includes automobile financing.

Neither representative responded to email inquiries from the Wisconsin Examiner last week seeking their comment on the report’s findings and conclusions.

Congress and President Barack Obama created CFPB after the Great Recession of 2008, with funding coming to the agency from the Federal Reserve through bank fees. The Federal Deposit Insurance Corp. and the Fed itself are financed similarly.

The law creating the bureau also insulated its director from being fired without cause by the president. The U.S. Supreme Court ruled that provision unconstitutional in 2020, however.

When the bureau issued regulations governing the payday lending industry and related short-term, nonbank lenders, the industry’s trade group sued to invalidate the rule. A federal judge in Texas rejected the lawsuit. 

On appeal, the payday lending industry focused on the funding mechanism, and in 2022, a federal appeals court panel sided with the industry, concluding that by sidestepping congressional appropriation, the funding violates Article I of the U.S. Constitution, which puts Congress in charge of appropriations. The Supreme Court will hear arguments on the case in October.