The incoming Congress already appears intent on weakening the financial reform legislation passed by the outgoing Congress.

Signaling the intentions of the incoming Republican leadership in the House, Spencer Bachus, R-Ala., who is expected to take over chairmanship of the House Financial Services Committee, and Judy Biggert, R-Ill., the senior Republican on that committee’s Oversight and Investigations Subcommittee, have written largely identical letters to the inspectors general of the Treasury Department and the Federal Reserve asking them to investigate the establishment of the Consumer Financial Protection Bureau, according to The Wall Street Journal.

One of the main targets is Harvard professor Elizabeth Warren, who has been picked by President Obama as a “special advisor” in setting up the new bureau under the auspices of the Federal Reserve.

Her special advisor status allowed the White House to avoid a messy confirmation process if she were nominated to chair the bureau, as Warren’s appointment has been fiercely opposed by the financial industry because of her outspoken criticism of the practices of the big banks.

Bachus and Biggert want the inspectors general to investigate how Warren arrived at her role in leading the establishment of the bureau, and claim it “undermines” the Constitution.

“The President’s decision to appoint Professor Elizabeth Warren as a special advisor to the Secretary of the Treasury and as a senior advisor in the White House with lead responsibility for establishing the Bureau, hiring its staff, and setting its agenda — as opposed to nominating the director of the Bureau, as contemplated by the Act — circumvented the advice-and-consent process and undermined one of the key checks and balances in our Constitution,” they wrote. “While the Act confers upon the Secretary of the Treasury limited interim authority 'to perform the functions of the Bureau' (Section 1066(a)), Professor Warren is now exercising that authority.”

In setting up the bureau, Warren surprised many in the financial industry by seeking out meetings with leaders of the big banks, including JPMorgan Chase CEO James Dimon, as well as consumer advocates, to hear their input. While she has been frank in publicizing her meetings with the financial industry, Bachus and Biggert want the inspectors general to uncover more information about these contacts, claiming “there is a clear absence of accountability and transparency.”

In the prolonged debate over the financial reform bill, the banking industry had tried to head off the establishment of the Consumer Financial Protection Agency, making the agency its No. 1 target and succeeding in placing it under the watch of the normally bank-friendly Federal Reserve. Other industries, including the accounting profession, succeeded in winning exemptions from regulation by the new bureau.

Other parts of the Dodd-Frank Wall Street Reform and Consumer Protection Act also appear to be the targets of the incoming House leadership. Besides the threats of repealing or at least defunding the bill, along with the health care reform bill, by candidates running this fall in the midterm elections, Republican lawmakers have written to regulators asking about the economic impact of new rules being formulated by the Securities and Exchange Commission to carry out various provisions of the financial reform bill.

House Minority Leader John Boehner, R-Ohio, who is expected to take over as Speaker of the House in January, campaigned on a pledge to the financial industry to do what he could to repeal the financial reform bill. While it’s unlikely that Republicans will be able to outright repeal the legislation unless they win control of both houses of Congress in the next election, in addition to recapturing the White House, they may be able to succeed in holding up some of the funding.

At the very least, they will be able to lead oversight hearings in the House and call on inspectors general and the Government Accountability Office to investigate various aspects of the financial reform and health care reform bills. Those efforts are likely to weaken key provisions of the bills, if not make them inoperative.

But in the end the effort might also have the opposite effect and help Warren and the Obama administration make a stronger case for why the reforms are necessary to prevent the next financial crisis from happening and keep consumers from being exploited by the financial industry.

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