Today the Competitive Enterprise Institute released a report documenting the harm inflicted on ordinary consumers of financial products by a federal agency that remains unaccountable to Congress, the President, and the courts: the Consumer Financial Protection Bureau (CFPB). The report urges Congress to make drastic reforms to the CFPB or even abolish it.
“The Consumer Financial Protection Bureau was set up under the Dodd-Frank act of 2010 in violation of constitutional norms ostensibly to protect consumers from bad actors in the banking and financial services industry, but the agency is instead actively harming consumers, pressing ahead with regulations even when the benefit to consumers is likely to be outweighed by the costs,” said Iain Murray, vice president for strategy at CEI and author of the report, The Case against the Consumer Financial Protection Bureau: Unconstitutionally Structured and Harmful to Consumers. “The CFPB would be far less able to abuse its power and make bad decisions if it were held accountable. It’s urgent that Congress take action to stop the CFPB and restore constitutional checks and balances aimed at protecting Americans from abuses of government power.”
The report details specific problems with the agency ranging from the lack of congressional oversight over the agency’s $650 million budget and operations, to its trampling on consumer privacy and First Amendment free speech rights, to its failure to protect consumers from harm.
For example, though CFPB defenders point to the huge $185 million fine the Bureau levied on Wells Fargo bank for the “upselling” scandal, in which bank staffers misled customers into opening new accounts for new services or fraudulently opened accounts in their names, the facts show the CFPB failed to catch Wells Fargo’s wrongdoing until after it was revealed in the media. Ironically, the large fine imposed by the CFPB will ultimately be passed along to ordinary Wells Fargo customers—exactly the people the Bureau was supposed to protect.
In addition to the report, CEI has a pending lawsuit challenging the constitutionality of the CFPB, State National Bank of Big Spring v. CFPB.