On Monday, President Obama nominated former Ohio AG Richard Cordray to head the Consumer Financial Protection Bureau. The CFPB, which was created by the Dodd-Frank Act, launched yesterday without a director and so far without any of the reforms enacted by lawmakers.
Sen. Richard Shelby commemorated the launch with an op-ed in the Wall Street Journal reiterating his May 5th promise — joined by 43 other senators — to oppose any nominee to lead the bureau until the Dodd-Frank law is amended. According to Senator Shelby, the CFPB is “the most powerful yet unaccountable bureaucracy in the federal government,” and needs to be accountable to the American people. “Unless Congress enacts reform,” says Shelby, “it is only a matter of time before this concentration of power is abused or misused to the detriment of American businesses and consumers.”
Senator Shelby’s criticism echoes the arguments made by Boyden Gray in this Washington Post op-ed, which is a summary of this Federalist Society white paper in which Gray outlines Dodd-Frank’s constitutional defects. According to Gray, Dodd-Frank “created a structure of almost unlimited, unreviewable and sometimes secret bureaucratic discretion, with no constraints on concentration – a breakdown of the separation of powers, which were created to guard against the exercise of arbitrary authority.” With regard to the CFPB, which “has the authority to implement and enforce all consumer-related laws involving finance and credit,” he maintains that it is constitutionally defective because it “does not have an internal structural check, and escapes both presidential and congressional oversight.”
Kudos to Senator Shelby for forcing public officials, opinion leaders, and the American people to focus on the structural threat rather than the individual threat of any single nominee. As friendly as Cordray might be with trial lawyers, or as anxious as he might be to become the nation’s Wall Street Police Chief, Dodd-Frank and the CFPB are emblematic of a much greater problem: the inability of public officials to find solutions to complex problems without resorting to the core progressive impulse of centralization.
The financial industry is complex. Naturally, the architects of Dodd-Frank and the CFPB thought the only way to solve problems in that industry — real and perceived — was to create a legal and regulatory regime that was even more complex. In the process, they used the same playbook they used with Obamacare: centralize, ignore structural divisions of power in our system of government, and subordinate the input of the American people to the big plans of “independent” agents. As nice as she is, I don’t think American life would be better, or consistent with our constitutional structure, if it were engineered by a dozen Elizabeth Warrens. But — as TR famously declared — “to hell with the Constitution when the people want coal,” right?