Like so many bureaucracies, the Obama-era Consumer Financial Protection Bureau, a creation of the Dodd-Frank financial reform bill, began with the very best of intentions. But it has failed to do its job. Following the resignation of CFPB chief Richard Cordray, it’s a good time to consider shutting down the agency altogether.
CFPB is often mischaracterized as a “consumer watchdog” in the mainstream media. Consumer attack dog is more like it.
Set up to protect consumers from predatory lenders and rogue banks, the CFPB has in fact led to less credit for financially troubled Americans, and is arguably not even legal. And no, that’s not just our opinion.
An October 2016 Supreme Court ruling found CFPB’s structure to be unconstitutional, a violation of the separation of powers in the nation’s supreme law.
One element of the high court’s decision was that Cordray could only be fired by the president for cause — making it very hard to get rid of even an incompetent in the job. Worse, by funding the CFPB from the Federal Reserve, not Congress, the agency lay just outside the direct oversight of Congress. It had massive power over finance in the U.S. economy, with little or no accountability. Cordray did little or nothing to remedy this.
“We are long overdue for new leadership at the CFPB,” said House Financial Services Committee Chairman Jeb Hensarling of Texas. “The extreme overregulation it imposes on our economy leads to higher costs and less access to financial products and services, particularly with lower and middle incomes.”
Hensarling hits the proverbial nail right on the head. As such, why name anyone to the post? It’s a rotten agency, prone to overregulation and never really needed at all. While Republicans might like to have one of their own as its head, imagine a less market-friendly administration in the future — one that will use the CFPB as a political bludgeon to go after political foes and industries it doesn’t like.
No, don’t name a new head for the CFPB. Close it down entirely while you have the chance.
In its short life, the CFPB has already abused its power and failed to use its power when it might have helped.
Remember the Wells Fargo “upselling” scandal, in which the bank’s employees either misled some people into opening accounts for services they didn’t need or want, or actually opened accounts in the names of some customers without them knowing about it — which is fraud.