The CFPB was a train wreck under Obama and it's no better now

Remember when Elizabeth Warren was reminding everyone how important her brainchild, the Consumer Financial Protection Bureau (CFPB) was and how it was going to be turned into a tool of big business under President Trump? Wishful thinking at best, but closing in on two years under this administration, a Wall Street Journal analysis reveals that the bureau is still mostly up to their old tricks. In fact, to hear their description of it, you’d think Senator Warren would be proud. Of course, the real problem which isn’t being addressed is that the “work” being done there is frequently more destructive than constructive. First, the short version of the WSJ analysis. (Subscription required)

The Consumer Financial Protection Bureau has in recent months found illegal activities in mortgage and auto-loan servicing and at payday-lending companies, a sign the bureau continues to scrutinize financial companies under the Trump administration.

The CFPB provided an update on its supervision and examination activities in a report released Thursday—the first since acting Director Mick Mulvaney took over in November 2017. Mr. Mulvaney, a Trump appointee who also serves as the White House budget chief, has introduced a more collaborative enforcement approach to companies the CFPB oversees than was the case during the Obama administration. That has prompted criticism from officials hired in the prior administration.

What’s notable is that the supervisory or examination part of the CFPB has experienced very little change. It’s largely business as usual,” said Alan Kaplinsky, a financial-industry lawyer at Ballard Spahr LLP.

So it’s business as usual. That’s of interest on two fronts. First of all, claims that the Trump administration was somehow going to subvert the CFPB’s mission were clearly off the mark. That bad news is that Trump didn’t subvert the CFPB’s mission which was a fool’s errand to begin with. Under the leadership of Mick Mulvaney, who is leaving the post shortly, nothing is all that different from when Richard Cordray (now running for Governor of Ohio on the Democratic ticket) was in charge.

And if you think that’s going to change any time soon you’re probably kidding yourself. As the LA Times was reporting recently, it appears that Trump’s next nominee for the post, Kathleen Kraninger, has made it through committee on a party-line vote and will likely be confirmed shortly. She’s a close associate of Mick Mulvaney and will likely just be producing more of the same. Keep in mind that she’s a Homeland Security expert, so I remain unsure what she’s doing at CFPB to begin with.

It’s possible that there’s some better news on the horizon, however. The Supreme Court is preparing to hear a challenge to the constitutionality of the structure of the Bureau. (Washington Times)

The Obama-era Consumer Financial Protection Bureau faced a legal challenge at the Supreme Court on Thursday to its singe-director format, a setup that Supreme Court nominee Brett M. Kavanaugh has consistently ruled against for placing too much power in the hands of one unaccountable bureaucrat.

State National Bank of Big Spring, Texas, along with the nonprofit Competitive Enterprise Institute and the seniors’ advocacy group 60 Plus Association, filed a petition with the high court to hear a lawsuit that seeks to declare the CFPB’s organizational structure unconstitutional. The agency was created in 2010 as part of the Dodd-Frank financial regulatory law.

It’s interesting that this case will be reaching the Supremes just as Kavanaugh is likely being confirmed. He was one of the earliest people to note the bizarre structure of the agency and the unaccountable nature of its director as currently structured. There is also no meaningful oversight of the CFPB’s budget. And what were they doing with all of their money while nobody was watching? As we discussed earlier this summer, Richard Cordray was found to have used the massive fines they charged “improperly operating” private companies as a revolving slush fund where money rarely if ever went back to injured consumers, but was instead funneled into “educational activities” that amounted to little more than advertising for Democrats.

Perhaps the Supreme Court can make at least some inroads toward putting a leash on the CFPB. Sadly, they can’t simply rule it out of existence absent congressional action on the law which created it. And if history is any guide on that subject, there is little reason to hope for that. Any government entity which consumes taxpayer dollars, once summoned into existence, is essentially eternal.

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