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Time to Hold the CFPB Accountable
Published in Sunshine State News, The Hill, Florida Politics, Saint Peters Blog, The Ledger and the Washington Examiner.
You don’t have to take my word on this.
On October 11, 2016, the D.C. U.S. Circuit Court of Appeals found the CFPB’s leadership structure unconstitutional. In its decision, the court stated, “The [CFPB] Director enjoys significantly more unilateral power than any single member of any other independent agency[,] . . . power that is not checked by the President or by other colleagues. Indeed, other than the President, the Director of the CFPB is the single most powerful official in the entire United States Government . . . .”
This unsettling unilateral power, coupled with the inability for other arms of the federal government to review or disapprove of the CFPB’s actions, not only flies in the face of our government’s system of checks and balances, but also promotes rogue operations and regulations that have the potential to grossly alter our economy and harm the livelihoods of millions of Americans.
The CFPB was created by Democrats in response to the 2008 financial crisis as a provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). This 2,300-page piece of legislation was sold to the public as a means to hold bad financial actors accountable, prevent future systemic failures of our financial system, and provide increased transparency and consumer protections for investors. President Obama promised Dodd-Frank would “lift the economy,” but once again, he gave the American people false hope.
Instead, in the years since it was enacted, the big banks have grown bigger, while community financial institutions are disappearing at an average rate of one per day. Consumer credit has tightened up, and low and middle-income borrowers are feeling these effects more than most.
Although many financial service providers are already regulated at a state and federal level, the CFPB creates excessive red-tape for industries across the entire financial services spectrum without accountability to Congress. Dodd-Frank completely disregarded the important congressional appropriations process and specifically allowed the CFPB to receive its funding directly from the Federal Reserve’s operating expenses so the CFPB could operate outside of congressional oversight.
The CFPB’s authority to regulate financial services transactions is so expansive it goes well beyond banks and other depository institutions. The sole director is appointed to a five-year term and, once appointed, can implement policies in whatever way he or she sees fit. To make matters worse, the CFPB lacks the internal checks and balances to which other independent regulatory agencies are subject to.
Instead of issuing clear and specific guidance, the CFPB uses enforcement tactics that financial institutions have to measure against their own practices and then somehow implement, often to the consumers’ detriment.
For example, the CFPB does not distinguish credit unions and community banks from large financial institutions and nonbank lenders. As a result, the CFPB’s broad and overly burdensome regulations are severely impairing these important community-based financial institutions by limiting consumer credit availability and choice, as well as increasing costs for credit union members and community bank customers. Additionally, new CFPB rules and regulations have prevented many new mortgage loans from being made, particularly for low and middle-income borrowers.
There is no question about it, we must start easing the regulatory burdens faced by our community financiers, and reign in the unilateral power the CFPB Director has over hardworking taxpayers. As a Member of the House Financial Services Committee, I am committed to working with my colleagues to enact legislation that holds the CFPB accountable to all Americans, and to ensure its actions stop harming the consumers it was charged to protect.