DALLAS - As President Donald Trump rolls back financial regulations and looks to make personnel changes at the Consumer Financial Protection Bureau (CFPB), Congress should begin work immediately to abolish the regulatory agency.
"The CFPB is the most unaccountable, out-of-control agency in Washington," said Institute for Policy Innovation (IPI) resident scholar Dr. Merrill Matthews. "As part of President Obama’s Dodd-Frank financial legislation, Democrats created the CFPB and tried to completely insulate it from any presidential or congressional oversight. Congress has no control over the CFPB’s budget and the law only permitted the president to fire the agency’s director 'for cause.'"
“Unaccountable government is one of President Obama’s most regrettable legacies, and the number one offender has been the CFPB,” said Matthews.
“Since its creation, Congress has been unable to rein in the CFPB, cut its funding, fire its people or challenge it in court,” said Matthews. “The agency, called by House Financial Services Committee Chairman Jeb Hensarling (R-Texas) ‘the single most unaccountable agency in the history of America,’ has been a regulatory monster, overregulating anything that handles, loans or manages money, including credit unions, payday lenders, auto financing, medical debt, and student debt.”
President Obama used his recess appointment power to make Richard Cordray the CFPB’s director. But the U.S. Supreme Court ruled unanimously that the president did not have the constitutional authority to determine when the U.S. Senate was in recess. The Senate’s Democratic leadership eventually worked out a deal with the Republican minority to allow Cordray to keep his job.
And recently a three-judge panel on the DC Court of Appeals struck down the CFPB director’s legal insulation, ruling that the president could fire the director at will. That ruling is on hold pending appeal.
“The agency should be abolished and its budget—which has grown by 500 percent in five years, to $632 million—should be returned to taxpayers” said Matthews. “But that will take an act of Congress. In the meantime, making some much-needed personnel changes and inserting some accountability will be a good first step.”
The Institute for Policy Innovation (IPI) is an independent, nonprofit public policy organization based in Dallas. IPI resident scholar Dr. Merrill Matthews is available for interview by contacting Erin Humiston at (972) 874-5139, or erin@ipi.org.