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How House Republicans plan to defund Elizabeth Warren's little agency of tyranny
Last days for the out-of-control CFPB?
We told you on Monday about the special challenge Republicans face in what to do about the Consumer Finance Protection Bureau. It's a totally out of control administrative agency gifted with immense powers by Dodd-Frank, and designed by its architect - Elizabeth Warren - to be almost impossible for a Republican to get a job at. Oh, and Congress is required by statute to fund it. CFPB's director, left-wing zealot Richard Cordray? The president can fire him only "for cause," and that's a lot more complicated than at-will employment.
Democrats designed the CFPB this way intentionally during the Obama Administration, so that any future Republican president would find the agency impossible to get control over. But in the House, anyway, Republicans are refusing to accept the inevitability of the CFPB running roughshod over businesses in the private sector. In today's Wall Street Journal, Congressman Jeb Hensarling lays out a path for defunding and getting rid of this rogue agency:
The CFPB is arguably the most powerful, least accountable agency in U.S. history. CFPB zealots have the power to determine the “fairness” of virtually every financial transaction in America. The agency defines its own powers and can launch investigations without cause, imposing virtually any fine or remedy, devoid of due process. It requires lenders essentially to read their clients’ minds, know and weigh their clients’ comprehension levels, and forecast future risk. It can compel the production of reams of data and employ methodologies that “infer” harm without finding any specific instance of harm or knowing violation.
The regulatory web spun by the CFPB can make every provider of financial services guilty until proven innocent, inviting selective enforcement and financial shakedowns. The CFPB is the embodiment of James Madison’s warning in Federalist No. 47 that “the accumulation of all powers, legislative, executive and judiciary, in the same hands . . . may justly be pronounced the very definition of tyranny.”
This tyranny has harmed the very consumers it purports to help. Since the CFPB’s advent, the number of banks offering free checking has drastically declined, while many bank fees have increased. Mortgage originations and auto loans have become more expensive for many Americans.
No corner of American finance is beyond the CFPB’s grasp, even auto dealers—which are specifically excluded from its jurisdiction by the Dodd-Frank Act. To dodge this legal constraint, the CFPB regulates auto dealers through enforcement “bulletins” on auto lenders, employing statistical analysis rather than specific acts to charge lenders with discriminatory lending. The race of borrowers is inferred based on the borrowers’ names and home addresses. Through this ruse they smear and shake down lenders.
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Yet even with good policy, the CFPB would still be unconstitutional. For those who reject Sen. Warren’s view that the ends justify the means, the agency must be functionally terminated. Consumer protection can instead come through an accountable and constitutional process.
The Senate can achieve this with a simple majority vote. Dodd-Frank requires the Fed to fund all CFPB budget requests automatically—creating an estimated $6.6 billion funding stream over the next 10 years. Under a budget process known as reconciliation, the House Financial Services Committee, which I chair, and the Senate Banking Committee could be mandated to save $6.6 billion over 10 years of the budget. In the ensuing reconciliation bill the two committees could then direct the Fed to terminate CFPB funding. Senate Democrats could not filibuster the bill.
Opposing the CFPB is in no way a call for abuse of consumers. Consumer protection was merely the thin guise under which the CFPB was created. It's real purpose is to give Democrats in government unfettered power to harass the private sector, and to shield said Democrats from any loss of power in the event of an election loss like the one they just suffered. By pretending this is about helping consumers, Democrats managed to stuff into Dodd-Frank a mechanism that permits Cordray to pretty much print money and spend it as he likes.
This is the sort of end-run around consitutional limits on government that should trouble anyone interested in good government, regardless of their ideological leanings. How would Democrats like it if Republicans created an agency whose sole purpose was to harass labor unions, and it could never be defunded, re-staffed or reined in - regardless of who was president? They wouldn't. They would scream bloody murder. Yet that's exactly what they did when they created the CFPB.
Hensarling has offered a solid way forward here, and Republicans in both branches of Congress should follow it. If the Republican Party is about limited government at all, it has to be willing to get rid of a horrible abuse like the CFPB. Let Richard Cordray harass the business sector on his own, and see how far he gets with it.
Dan's new novel, BACKSTOP, is a story of spiritual warfare and baseball. Download it from Amazon here!