The CFPB deserves to be terminated for its blunders, and the sake of sensible economic regulation and the American constitutional order.
The CFPB deserves to be terminated for its blunders, and the sake of sensible economic regulation and the American constitutional order.
D onald Trump’s current mood seems to be a bellicose one as he faces down the alphabet soup of agencies in Washington, D.C. One agency that deserves to feel the horns of the bull-in-the-china-shop-in-chief is the Consumer Financial Protection Bureau (CFPB), an ugly mess of structural abnormalities and constitutional affronts. The Dodd-Frank Act of 2010, which created the agency, “delegate[d] effectively unbounded power to the CFPB, and couples that power with provisions insulating CFPB against meaningful checks,” C. Boyden Gray and Adam J. White wrote. According to the Manhattan Institute’s Ilya Shapiro, the agency enjoys latitude “beyond even ‘independent’ agencies like the [Securities and Exchange Commission] and [Federal Communications Commission].”
The CFPB survived a potentially lethal constitutional challenge at the Supreme Court in 2024 in CFPB v. Community Financial Services Association of America (CFSAA). But that fact should not halt — nor even pause — Trump and congressional Republicans. As the saying goes, Congress brought the CFPB into this world, and it can take it out. The majority opinion in CFPB v. CFSAA was neither uncontested in its reasoning nor a sanction of the wisdom of the agency’s structure. Bad is not a synonym for unconstitutional. Not everything that violates the Constitution’s spirit violates its letter, or the dictates of prudence. After all, the Fourth Amendment can be put up for sale, bureaucrats can pressure industry (to a point), and tax policy can be perverted to effect economic planning.
When it finds a problem of constitutionalism or governance, Congress ought to act — indeed, to act is its duty. The legislative branch is, after all, the first branch of the American government. It would do better to strike out ahead of the courts instead of hanging behind and waiting for judges to smooth over constitutional disputes, as has become its wont.
“The accumulation of all powers, legislative, executive, and judiciary, in the same hands . . . may justly be pronounced the very definition of tyranny,” James Madison wrote in Federalist No. 47. Nevertheless, the CFPB holds just such an accumulation of power.
The CFPB — by nature an executive agency — writes law with the pen of enforcement action and rulemaking, its authorities constrained only a little by Dodd-Frank. Congress unleashed the agency to pursue whatever projects it thinks might lie within the borders of its continent-sized statutory bailiwick. The agency has made full use of this (perhaps unconstitutional) discretion. To take a particularly extraordinary example, it moved recently to extend certain regulations of real-world bank accounts to video-game currencies.
Moreover, the CFPB funds itself unilaterally — without Congress — setting its own budget and requisitioning funds from the Federal Reserve. In surrendering the power to pull hard on the CFPB’s purse strings, Congress gave the agency free rein. Never mind the hundreds of years the English-speaking peoples spent in periodic political resistance to ensure that, as a basic matter of accountability, executive officials remain fiscally beholden to elected legislators.
Making matters worse, the CFPB, as initially conceived, was not to be disturbed by oversight from the president. Before the Supreme Court’s ruling in Seila Law v. CFPB (2020), the bureau’s director had a thick layer of insulation from removal by the president. While correctly decided, this case merely chipped away at the agency’s most obviously unconstitutional protrusion. Fundamentally, the constitutional problems that plague the CFPB live in the fundamentals of its construction. The full task of restoring constitutional order can be accomplished only with a sledgehammer, not a chisel. The rotted structure must be razed, not merely remodeled.
The uses to which the CFPB has chosen to put its unique privileges evince the wisdom of James Madison’s warning. Under Joe Biden–appointed Rohit Chopra, businesses and consumers have found themselves harassed, hectored, and micromanaged. The New York Times summed up the license taken by the agency well, writing that “Chopra insists that he always follows the rules,” but “his view is that he’s simply more expansive than others in determining what those rules are.” As Chopra’s tenure shows, “more expansive” quickly expands into lawlessness. The CFPB’s misadventures are myriad and have proved economically costly.
Much of the governance ecosystem in Washington, D.C., has strayed far from the simple and elegant tripartite system the Constitution prescribes. Administrative agencies exercise ever more power while Congress sits idle or gridlocked. Rule-by-unelected-expert was not the government for which the Founding Generation fought but the innovation of Progressive Era politicians in thrall of the cult of “disinterested” and “enlightened” experts. They sought to smooth over the bumps and frictions of political negotiation in favor of the greased skids of “administration.”
The CFPB — the brainchild of arch-progressive senator Elizabeth Warren (D., Mass.) — is not an old, venerated institution. It is a new, failed experiment (“experiment,” another watchword of Progressives). For its blunders and for the sake of sensible economic regulation and the American constitutional order, the CFPB deserves to be terminated.