Government

What Is the Consumer Financial Protection Bureau?

The battle over who will lead the CFPB should lead to far more basic questions about bureaucracy.

Brian Mark Weber · Dec. 1, 2017

When Leandra English walked in to work as the new director of the Consumer Financial Protection Bureau (CFPB) earlier this week, there was one little problem: President Donald Trump had already appointed his Office of Management and Budget director, Mick Mulvaney, to head the Obama-era regulatory agency. There were two bosses, but only one had the constitutional authority to pick up the reins of power, and it wasn’t English.

It’s hard to blame English for assuming her role. After all, the CFPB was populated with strong supporters of the biggest names in the Democrat Party. So when her outgoing boss, Richard Cordray, handed over the keys, English probably didn’t give a moment’s thought to the separation of powers or that pesky old Constitution.

Moreover, she had the support of none other than House Minority Leader Nancy Pelosi, who incorrectly tweeted that English is the “rightful Acting Director.” Well, before President Trump stepped in, the CFPB could do just about anything its director wanted — such as appointing his own replacement.

Let’s take a moment to see what the CFPB is all about, and why a seemingly simple appointment is such a big deal.

As noted by PBS, “The agency was created under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, commonly known as Dodd-Frank. The idea for a financial watchdog agency came from Sen. Elizabeth Warren, D-Mass., a Harvard Law School professor at the time. Warren first proposed creating the agency in 2007 as a way to better regulate mortgages, student loans, and other financial products.”

Sounds innocent enough doesn’t it? The problem is that government “watchdog” agencies rarely do anything other than empower politicians on Capitol Hill to regulate and control our lives (and thereby empower themselves). Throughout our country’s history, multi-member boards were in charge of agencies in order to diffuse power. That changed when Barack Obama created the CFPB.

How much power does the director of CFPB really have? The Washington Post explains, “The Director of the CFPB possesses enormous power over American business, American consumers, and the overall U.S. economy. The Director unilaterally enforces 19 federal consumer protection statutes, covering everything from home finance to student loans to credit cards to banking practices. The Director alone decides what rules to issue; how to enforce, when to enforce, and against whom to enforce the law; and what sanctions and penalties to impose on violators of the law.”

If it seems like the agency is more about exercising power than protecting consumers, this became even clearer when Cordray stepped down to run for governor of Ohio. He appointed Leandra English without checking with anyone, including the president. And he did it largely to boost his street cred with the #Resistance.

The problem was that the CFPB had a provision that seemingly took precedence over federal law by allowing the current director to appoint a replacement until the Senate chooses a new director. Cordray thus selected his own successor. And when President Trump appointed Mick Mulvaney to replace Cordray, English filed a lawsuit against the president and Mulvaney — a lawsuit that was correctly thrown out by a federal court.

Even the Ninth Circuit Court of Appeals — historically hostile to Republicans and the Constitution — sided with the president.

In Trump’s favor were a congressional act and the Constitution. The Federal Vacancies Reform Act of 1998 is very clear in stating that the president “can designate any Senate-confirmed official (which would include Mulvaney) to perform the duties of a vacant federal office in an acting capacity for a statutorily limited period of time.” And Article II of the Constitution clearly gives the president authority to make executive department appointments.

This was a significant victory for Liberty and the separation of powers. Indeed, until the CFPB was created, there had never been a federal agency that was headed by a single person who possessed such broad powers.

As The Washington Post states, “The CFPB’s concentration of enormous executive power in a single, unaccountable, unchecked Director not only departs from settled historical practice, but also poses a far greater risk of arbitrary decisionmaking and abuse of power, and a far greater threat to individual liberty, than does a multi-member independent agency.” When The Washington Post is worried about government’s threat to individual liberty, you know we’ve got a problem.

Not surprisingly, the agency’s supporters are also donors for the Democrat Party. The Washington Examiner reported that 593 CFPB executives gave money to the likes of Hillary Clinton, Bernie Sanders and Elizabeth “Fauxcahontas” Warren. Only one gave to a Republican. Clearly, Obama set up this agency to do more than protect consumers.

And what does Trump’s pick to head the CFPB think of the organization he leads?

In a press conference, Mulvaney said, “It is an awful example of a bureaucracy that has gone wrong. It is almost entirely unaccountable to the people who are supposed to oversee it or pay for it. I still have the same fundamental principled misgivings about the way this bureau is structured. I think it is wrong to have a completely unaccountable federal bureaucracy. I think it’s completely wrong,” He added, “I’m just learning about the powers that I have as acting director. They would frighten most of you. They would probably worry you to think about how little oversight Congress has over me now as I’m the director, how little oversight the committees have over how CFPB functions.”

Too many of these agencies become self-serving, all-powerful entities of the Leviathan state, accountable to no one. Mulvaney’s comments about his new job should not be met with calls for reform, but should lead to the abolishment of the CFPB. Doing so would take us one step closer to draining the Swamp and protecting Americans from a further erosion of our Liberty.

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