Op-ed: Who Will Protect Consumers From The Consumer “Protection” Bureau?
Americans across the board agree the country benefits from a transparent and accountable federal government. They also agree with the Founders that a system of checks-and-balances is one of the best bulwarks against unaccountable government.
Fear an aggressive legislature? Give judges the power of judicial review to overturn bad laws. Fear an oppressive monarchy? Give the legislature the power of the purse. Fear an activist judiciary? Give the executive power to appoint better judges, and the legislature power to impeach the really bad ones. The Constitution is chock full of structures to separate the legislative, executive and judicial powers for the protection of the people.
Enter the Consumer Financial Protection Bureau (CFPB), one of the most unaccountable government entities in American history. It’s a far cry from Abraham Lincoln’s “government of the people, by the people, [and] for the people.”
The CFPB writes its own laws, and American consumers suffer. Homeownership is a foundation of the American dream: establishing independence, raising a family and building wealth. Yet the CFPB has instituted new regulations making homeownership harder. The Qualified Mortgage Rule, for example, mandates a high 43 percent debt-to-income ratio, even if a borrower has exceptional credit history or has means outside his or her income to cover their monthly mortgage payment. In addition, new rules aimed at simplifying mortgage terms for consumers buying a house have been fraught with problems. The CFPB declined to seriously consider bipartisan input from the people’s representatives in Congress when finalizing the regulations (read: laws), and American consumers have paid the price.
The CFPB’s executive acts unilaterally, and the voices of the American people are not heard. The Bureau is currently headed by a single Director that is not answerable to the President or Congress. According to the United States Court of Appeals for the District of Columbia, the unelected CFPB Director “possesses more unilateral authority – that is, authority to take action on one’s own, subject to no check – than any single commissioner or board member in any other independent agency in the U.S. Government.”
And it shows. When accepting comments on proposed rules, it neglects to provide notice to the public, something required by law and standard procedure at other federal agencies. In 2013, the Bureau refused to accept comments when it issued new policy regarding automotive lending, despite the legislation which created the CFBP—the Dodd-Frank Act—explicitly stating it should have no authority over automotive dealers. Car buyers having trouble financing their purchase now know where to place some of the blame.
When disputes arise between consumers and businesses, arbitration can be a valuable avenue to avoid litigation. However, some special interests like costly court battles. When considering new rules for arbitration the Bureau ignored the benefits it provides to consumers due to pressure from trial lawyers eager to get their hands on a new source of legal fees from class action lawsuits.
Yet for those who do desire and deserve their fair day in court, the CFPB acts as an unjust prosecutor, judge and jury—and Americans pay the price. It investigates violations of its own regulations, passes judgment on these violations and then sentences the guilty parties (if any). Regularly, the Bureau pressures financial services providers into settling claims of a violation without due process. In one instance, instead of considering the arguments of a company who appealed a regulatory verdict, the Bureau’s Director instead simply increased the penalty (fortunately this abuse of power was eventually overturned by an independent court). Without structural reforms, a company in my district may soon be subject to this same unfair process.
Clearly, it’s time to protect consumers from the “Protection Bureau.”
It’s time the CFBP follow the same principles of transparency and accountability enshrined across all of our federal agencies.
It’s time to reform the leadership of the CFPB to be more accountable to the people.
It’s time to restore consumer access to the financial products and services upon which they have long depended. Without proper checks and balances we should only expect continued erosion of consumers’ financial liberty.
This is why I am fighting for changes in Congress to make the Consumer Financial Protection Bureau more accountable to the American people. As a member of the House Financial Services Committee, I am supporting legislation, the Financial CHOICE Act, to restore the checks and balances that Abraham Lincoln and America’s Founding Fathers knew were essential to representative government.
Congressman Randy Hultgren represents Illinois’ 14th District and is a member of the House Committee on Financial Services.