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This Is The Perfect Time To Destroy The Consumer Financial Protection Bureau

Republicans have long argued that the CFPB is unconstitutional and unaccountable. Democrats proved that’s exactly what they want it to be.


Republicans have long argued that the Consumer Financial Protection Bureau is corrupt, unaccountable, and unconstitutional. This week, Democrats proved that’s exactly how they like it.

After resigning as CFPB director, Richard Cordray named his former chief of staff, Leandra English, as interim head of the agency. The Dodd-Frank financial regulation law empowered Cordray to pick someone in “absence or unavailability of the Director.” So Donald Trump made Mick Mulvaney available, invoking the Federal Vacancies Reform Act, which allows the president to temporarily fill a vacancy with a government official whom the Senate has confirmed. The CFPB’s own top lawyer, a Democrat appointee, sided with Trump. It seems unlikely that a clause in Frank-Dodd meant to prevent vacancies will supersede the legitimate powers of the president, but we’ll see.

The good news is that Democrats’ insistence on creating a crisis over the CFPB offers Trump and Republicans a political and legal opening to begin seriously diminishing the power and reach of the agency, and perhaps eliminate it altogether. Mulvaney, who has called the agency a “sick, sad joke” that “has no accountability to anyone,” so he sounds like an ideal candidate for the job.

For starters, Congress can strip the agency of most of its unrestrained regulatory powers. It can take control of the CFPB’s budget. Both of these are unlikely. But in the meantime, there is no reason Mulvaney shouldn’t severely inhibit the agency’s activism. If those within the agency refuse to cooperate with these goals, the administration had every right to fire them. Let’s hope there’s widespread mutiny within the CFPB.

Because not only does the CFPB undermine consumer choice, it represents the worst overindulgences of the administrative state. Sen. Elizabeth Warren built the CFPB to circumvent checks and balances. Frank-Dodd ensured that the director would be virtually un-fireable in case there was ever a Republican president. In case there was ever another Republican Congress, the CFPB would not be funded by tax dollars but the Federal Reserve.

The agency was then stacked with partisan ideologues and allowed to conceive its own arbitrary and wide-ranging rules to go after any practice it found “abusive,” “unfair,” or “deceptive.” The CFPB was sanctioned to “administer, enforce, and otherwise implement federal consumer financial laws, which includes the power to make rules, issue orders, and issue guidance” without any genuine due process. It could then mete out penalties of its choosing.

In 2016, the U.S. Court of Appeals for the D.C. Circuit held that the CFPB was unconstitutional because it gave unprecedented executive authority to a “single, unaccountable, unchecked Director.”

Because the CFPB is an independent agency headed by a single Director and not by a multi-member commission, the Director of the CFPB 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. Indeed, as we will explain, the Director enjoys more unilateral authority than any other officer in any of the three branches of the U.S. Government, other than the President. (emphasis added)

Once you set aside the legal dispute, Democrats are now arguing that their favored bureaucrat should be able to wrest control of a law-enforcement agency because they’re unhappy with the outcome of the last election. It’s the kind of ‘norm-busting’ that Trump’s antagonists seem perfectly willing to engage in. As the Wall Street Journal notes, Democrats act as if the CFPB is its own branch of government. No, the CFPB doesn’t deserve “independence” from oversight any more than any other law enforcement agency.

Many who defended Barack Obama’s unconstitutional use of recess appointments, which initially included Cordray, are now engaged in a staggering display of hypocrisy. David Axelrod, former senior advisor to Obama, called President Trump’s lawful appointment a “hostile takeover.” One of the most prevalent arguments against Mulvaney’s appointment, in fact, is the contention that Trump is likely to gut the agency.

So what? If CFPB’s charge is both sweeping and deliberately ambiguous, the president’s appointee has every right to dictate the aggressiveness of the agency. If you don’t like the idea of powerful, unaccountable agencies falling into the hands of Republicans, stop creating them.