Cars, the Federal Reserve, and Refugees

The House this week passed three politically important bills. The first was concerned with the Consumer Financial Protection Bureau (CFPB) and its attempt to regulate car loans. The second is a bill to reform the Federal Reserve. Finally, the third is aimed at tightening the vetting rules for the large number of refugees that are likely to come to the U.S. within the next two years.

The “Reform/Audit the Fed” bill was preceded by a strong bipartisan vote of 332 – 96 to stop the Consumer Finance Protection Bureau from using statistical discrepancies to punish auto dealer loans. A coalition of Civil Rights organizations strongly opposed the measure. The CFPB is, for all practical purposes, immune to Congressional Control as its budget comes directly out of the budget for the Federal Reserve. As a consequence there is little Congress can do to stop its regulatory actions under divided government. But the CFPB actions against auto dealer loans has struck a nerve since auto dealers are in every Congressional District and the practical effect of the rule will be to raise interest rates for car loans. This vote is shown below:

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Eighty-Eight Democrats voted for the bill and 96 Democrats voted against. The APRE on this roll call is a very respectable 0.57 and the “errors” for the most part are close to the cutting line.

The “Fed Oversight Reform and Modernization (FORM) Act of 2015” is basically concerned with forcing the Federal Reserve to use a fixed formula to set interest rates. Republicans, for the most part, are suspicious of the Federal Reserve’s actions in the past few years even though many of them joined with many Democrats to pass the Troubled Asset Relief Program near the height of the financial crisis in October of 2008. Republicans almost all opposed the Dodd-Frank Act passed in July 2010. Part of the unease with the Federal Reserve is its policy of near zero interest rates with a balance sheet of $4 Trillion. This has fueled populist attacks from members of both political parties. However, this vote was largely along party lines and will likely not make the 60 vote threshold in the Senate:

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The Third important vote this week was on a bill to tighten the procedures for vetting refugees. In light of the terrorist attack in Paris members of both parties are queasy about letting in large numbers of Syrian refugees. This bill passed by a substantial margin with 42 Democrats voting for it and only 2 Republicans voting against it:

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This vote has a very high PRE of 0.8 and splits the Democratic Party. The chances of its passage by a veto proof majority of 67 in the Senate appear to be remote.

Complicating the issue of the Syrian Refugees and the CFPB vs. the car dealers, is that Congress must pass a bill funding the government by December 11 or there will be yet another Government Shutdown. These two issues are almost certainly going to be put in the funding bill as policy riders and this will trigger a confrontation with President Obama (and likely the Senate Democrats with the 60 vote threshold). Complicating matters is that Speaker Ryan does not trust President Obama and they have had a rocky relationship. Although Speaker Ryan does not want to have a government shutdown he has warned President Obama that he is not afraid to do so over some key issues such as Guantanamo Bay. So, Ho Ho Ho, another exciting Christmas may be ahead!