Tuesday, April 3, 2018

Trump Believes the Consumer Financial Protection Bureau Has Too Much Power

President Trump thinks the Consumer Financial Protection Bureau (CFPB) is far too powerful. CFPB is the agency that oversees banks, lenders, and large financial entities. Conservatives have attacked the CFPB for being unconstitutional since its inception. Trump appointed Mulvaney, who continues to serve as the director of the White House’s budget office, to lead the CFPB temporarily after Cordray resigned in November 2017. In Congress, Mick Mulvaney voted to eliminate the CFPB. Trump has not yet nominated a new director.
The two agencies with cultures most hostile to the “rule of law” are the CFPB and the EPA which is why President Trump put two of his toughest and smartest administrators, Mulvaney and Pruitt, at them. The rollback of the administrative state is working.
“The power wielded by the Bureau could all too easily be used to harm consumers, destroy businesses, or arbitrarily remake American financial markets. The structure and powers of this agency are not something the Founders and Framers would recognize. The CFPB accumulates legislative, executive, and judiciary powers in the same hands, the very definition of tyranny," said acting director Mulvaney.
Mulvaney asked Congress to make four changes to the Dodd-Frank Act in order to make the CFPB more accountable:
1. Fund the Bureau through Congressional appropriations rather then through the Federal Reserve; this change would make it easier for Congress to cut funding for the agency, or to bar it from spending money to enforce certain rules.
2. Require legislative approval of major Bureau rules;
3. Ensure the Director answers to the President in the exercise of executive authority; and
4. Create an independent Inspector General for the Bureau.
It was a foolish idea for Congress, in the Dodd-Frank Act, to create a regulatory body like the CFPB and make it completely independent of all the controls usually imposed under the Constitution.
CFPB is an example of classic DC insanity. Congress (and HUD) abused authority over Fannie and Freddie forcing them to buy subprime loans. So government creates crisis, which creates more government to regulate the private sector, which wasn’t the problem in the first place. Cordray, the former head of the CFPB sicced his powerful agency on Equifax, Experian and TransUnion to help ease credit restrictions. Cordray said he hoped to bring more than 10 million minorities who don’t have credit scores, due to a lack of recent credit history or too much derogatory information in their credit files, into the market for home loans by having the credit reporting bureaus include “alternative data” in files to help them build a credit history and gain access to credit. I think we saw this play before. It didn't end well.

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