WASHINGTON (Reuters) - President Barack Obama will veto a bill requiring the U.S. consumer watchdog to establish special advisory groups if the final version of the legislation cuts the level of funding available to the agency, the White House said on Tuesday.
The U.S. Consumer Financial Protection Bureau has created outside committees to advise it on actions related to community banks and credit unions. The legislation currently in the U.S. House of Representatives would make those groups mandatory and create another panel made up of small business leaders.
That proposal has garnered bipartisan support. But after a Republican-backed provision was added that would lower the consumer bureau's budget cap between 2020 and 2025, the White House said it opposed the current version of the bill.
"These reductions to the caps could result in, among other things, undermining critical protections for families from abusive and predatory financial products," the White House said in a statement.
The House was expected to debate the bill later on Tuesday and could vote on Wednesday. It would also have to pass the Senate, where Republicans hold a slimmer majority than in the House, before it reached Obama's desk.
Congress created the consumer bureau as part of the 2010 Dodd-Frank financial oversight law. It gets its funding from the Federal Reserve rather than through the appropriations process.
Republicans say this set-up makes the bureau less accountable to congressional oversight, and they have sought to bring its budget under more scrutiny.
House Republicans said the budget limits in the advisory-group bill were due to internal rules that require them to make cuts to offset any legislation that would lead to new government spending. Democrats, however, said Republicans could waive that rule if they wanted.
Jeff Emerson, a spokesman for the Republican-led House Financial Services Committee, said the bill would reduce the maximum amount the agency could draw from the Fed, but that the bureau is not projected to actually spend that much.