The Intractable CFPB Bureaucracy

Director Mulvaney has done some good, but many things proceed as they always have.

Lewis Morris · Sep. 13, 2018

Any hopes of seeing the constitutionally dubious Consumer Financial Protection Bureau go away under the Trump administration have been dashed for the time being. The CFPB released its first report under acting Director Mick Mulvaney last week, and it appears that the bureau is chugging along pretty much as before.

The activities report notes that the CFPB has uncovered rules violations and deceptive practices among banks, lending companies, auto and home loan servicers, credit card companies, and debt collectors. The 22-page report indicates that the CFPB is still tracking down and locating bad apples in the financial sector, which for some continues to justify the bureau’s existence.

Ronald Reagan did say that “a government bureau is the nearest thing to eternal life we’ll ever see on this earth.”

Mulvaney, who is also the chairman of White House Office of Management and Budget, has been the acting director since November 2017. While he has not been successful in shutting down the CFPB, he has been working to rein in the bureau. Mulvaney approached Congress about making the CFPB more accountable in issuing policy initiatives and giving the president unilateral authority to remove the CFPB director for any reason, not just “with cause,” whatever that’s interpreted to mean.

Last year the CFPB’s first director, Richard Cordray, claimed that only he had the power to appoint his successor. Not likely in a Trump White House. Cordray’s pick, Leandra English, sued the Trump administration for instituting Mulvaney, but she was on the wrong side of the law, and the suit went nowhere.

The political dust-up surrounding Cordray’s departure was typical of the CFPB’s bureaucratic nature and pedigree. Created by the Obama administration to be deliberately unaccountable to anyone (Democrats preferred the term “impartial”), even the president, establishing the CFPB was like setting loose a monster on America’s financial sector. The CFPB did not have to report details of its workings to Congress, and it did not have to account for money recovered from illegal financial dealings, which was supposed to go back to consumers but ended up in a slush fund for Democrat causes.

The CFPB may not be going away, but there is a chance that it could be getting a much-needed makeover soon. A possible new permanent head of the bureau, Kathy Kraninger, is eager to follow in Mulvaney’s footsteps and make the CFPB more accountable and effective in doing what it’s ostensibly supposed to do — protect consumers.

Kraninger’s nomination passed the Senate Banking Committee by a party-line vote last month. Kraninger’s Washington work has been mostly in Homeland Security, but she has bureaucratic experience and is considered a protégé of Mulvaney. Democrats consider her unqualified for the role and have tried to hamstring her nomination because she oversaw budgets for agencies connected to the Hurricane Maria response in Puerto Rico and family separations at the border. They will likely try to delay her confirmation vote as long as possible in the hopes of winning the Senate in November.

Regardless of which party controls Congress after November, though, the CFPB could be going to the Supreme Court. The power structure of the bureau is in question in a lawsuit being brought by State National Bank of Texas, the Competitive Enterprise Institute, and the seniors’ advocacy group 60 Plus Association. Their suit claims that the CFPB’s one-director power structure and its lack of accountability to Congress and the president are unconstitutional.

Supreme Court nominee Brett Kavanaugh has already ruled against the CFPB as a judge on the Court of Appeals for the DC Circuit. Even though his panel decision was later overruled by the full court, there is a strong chance that he may have the last word if he is confirmed soon.

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