The Corner

The CFPB Is a Great Example of Why People Feel Powerless

Tomorrow, Consumer Financial Protection Bureau Director Richard Cordray takes the stand at a House Financial Services Committee hearing. He deserves to be hauled over the coals, because his and his agency’s behavior are some of the reasons people feel so powerless in the face of the nation’s elites.

For example, Main Street is hurting. Why? Because the laws that were supposed to stop Wall Street from engaging in financial recklessness have been applied by the CFPB to all banks, not least in a campaign of regulation by enforcement (where you don’t know how you will be regulated until an enforcement order is made against you or a competitor). The result has been a decimation of small and medium-sized banks and a drying up of loans from them to individuals and businesses in small town America.

In doing so, Director Cordray and his Bureau have flouted the will of Congress. Not only did they want these regulations to exempt smaller banks, but they demanded a justification for any rule in the form of a cost-benefit analysis. As far as we can tell, the CFPB has failed to do this in any case, imposing hundreds or even thousands of pages of crushing regulation on the places where the middle class has always gone to get money when they need it.

Even when Congress explicitly told the CFPB that it couldn’t regulate in a specific area, it has done so. The Dodd-Frank Act specifically excluded auto dealer loans from CFPB oversight, but they found a way to regulate the finance firms that work with auto dealers using a bogus methodology that alleged breach of fair lending laws. That regulation will make cars more expensive, and result in white people getting refund checks because of statistically-proved discrimination against them as African Americans.

That’s not all. Part of the reason why people feel so powerless about this is because their elected representatives can’t do anything about it (which they interpret as laziness or disdain for their concerns). That’s because the CFPB is insulated from effective oversight by any branch of government:

  • The President cannot remove the Director for anything other than gross malfeasance
  • Congress holds no power of the purse over the Bureau
  • Courts are instructed by the law to defer to the Bureau’s judgment

If you think this would instill a degree of arrogance in the Director, you’d be right. Just watch his reaction to Rep. Ann Wagner (R.-Mo.) when she quizzed him about why he was spending $215 million on outfitting a palace as the Bureau’s headquarters: “Why does that matter to you?”

The CFPB is a rogue agency and needs to be hauled in. It’s a prime example, even if most Americans couldn’t name it, of why people are so angry.

If you are interested, I have some more detail, and more questions that Cordray needs to be asked, here.

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