WASHINGTON - Congressman Spencer Bachus, the top Republican on the Financial Services Committee, made the following statement today during consideration of an amendment offered by Congressman Ed Royce (R-CA)  that would require the relevant banking supervisors certify that CFPA rules and regulations will not negatively impact the safety and soundness of institutions.

"Mr. Chairman, this amendment really highlights the essence of the disagreement between the approach that we in the minority have proposed as oppose to what the majority has proposed. We all agree that consumer protection is very important and that there was a failure of consumer protection over the past several years. We can all agree that there was a failure of safety and soundness over the past several years. The financial crisis is a result of both the failure of consumer protection and safety and soundness regulation.

"However, the disagreement is do you regulate those in combination or do you separate those? We believe there are benefits and synergies of the same agency having both duties. The majority has said that is not possible and they need to be separated.

"I would argue that good consumer protection is good safety and soundness regulation; and good safety and soundness regulation is good consumer protection. Sheila Bair has testified strongly that consumer protection and safety and soundness should be conducted by the same agency: ‘Separating the examination and supervision of insured depository institution consumer protection compliance from that of safety and soundness could undermine the effectiveness of both...Examination and supervision for safety and soundness and consumer protection must be closely coordinated and reflect a comprehensive understanding of an institutions management, operations, policies and practices...Separating consumer protection examination and supervision from other supervisory efforts could weaken both and result in weakened financial institutions.'

"She could have similarly said it would result in diminishing consumer protection. The  Federal Reserve Chairman, Comptroller of the Currency and Acting OTS Director have all issued statements against the bifurcation of consumer protection and safety and soundness regulation.

"It is a fundamental difference we have with the legislation before us.  Someone said it was not fair to use the Fannie and Freddie analogy. In fact, there have been consumer mandates, many by this Congress, which violated good safety and soundness. The consequences of the consumer mandates and affordable housing dictates imposed on the GSEs by Congress resulted in a failure of Fannie and Freddie at a cost of hundreds of billions of dollars to the taxpayers. That was despite the statutory requirements that HUD consider the impact of the GSEs' consumer driven affordable housing mandates on safety and soundness.

"All the bill presently says is that they will consult the safety and soundness regulators; it does not say that they will seek certification or affirmation that the new regulations will not negatively affect safety and soundness. Mr. Royce, what he says, is that the CFPA if we are going to create that, that there are rules and regulations that they certify it will not negatively impact the safety and soundness of institutions. If you undermine the safety and soundness of those institutions, you place our economy and financial system under great stress and risk revisiting the experiences of the last year, where the problems on Wall Street directly affected Main Street's ability to get consumer credit and business loans."