Opinion: CFPB: The rogue federal agency that aims to reign but needs to be reined in
by Mike Hunter | Sep 12, 2017

Lord Acton once said that “power tends to corrupt…and absolute power corrupts absolutely.”

Nowhere is this truer today than at the Consumer Financial Protection Bureau. The CFPB is the quintessential example of what happens when accountability to Congress and the president is removed—when there are no checks and balances on the power of an unelected bureaucrat.

Created as a part of the Dodd-Frank Act in 2010, the CFPB wields immense, unbridled power over consumers and businesses, dictating the circumstances in which people have access to basic banking, student loans, home financing, credit cards, and a host of other financial services.

All of this power resides in one person: CFPB Director Richard Cordray, who was appointed by former President Barack Obama. Cordray answers to no one. Although Cordray has exercised his vast, hyper-paternalistic authority in a manner that has limited consumer choice and shuttered community banks, the president cannot fire him absent a finding of “inefficiency, neglect of duty or malfeasance in office.”

On top of all this, the director—not Congress—controls the CFPB’s annual budget and is thus utterly unrestrained by Congress’s power of the purse. And, even though the presidency that spawned Cordray and the majority in the Senate that confirmed him are now in the hands of different parties, Cordray remains in firm control of his part of the government.

Despite the term limits imposed on the nation’s top executive by the Constitution, the Obama CFPB persists. It is a dictatorship embedded in a democracy and an egregious affront to our system of government.

The arrogance that necessarily follows such an accumulation of power is on full display in the Cordray-led CFPB. As Sens. Ben Sasse, R-Neb., and Mike Lee, R-Utah, pointed out recently, Cordray has vigorously exploited his untouchability and “repeatedly advanced unnecessary regulations”—regulations that kill jobs, bloat government, and restrict liberty. In particular, the Senators noted, Cordray’s CFPB has overburdened credit unions and community banks; proposed rules that reduced access to credit for average consumers; and relied on flawed research. He’s also utilized enforcement actions in lieu of rulemakings—circumventing a process designed to give notice to the public and collect diverse viewpoints.

Because Cordray is not accountable to the elected branches of government, the judiciary has become the last redoubt to curtail his despotism. My attorneys general colleagues and I are pushing back against the CFPB in the courts. A panel of judges on the D.C. Circuit Court of Appeals recently held that the CFPB Director’s near-total insulation from democracy was unconstitutional. The “concentration of enormous executive power in a single, unaccountable, unchecked Director,” Judge Brett Kavanaugh accurately observed, “poses a far greater risk of arbitrary decision-making and abuse of power, and a far greater threat to individual liberty, than does a multi-member independent agency.”

The full D.C. Circuit court is reviewing this decision now, and I joined with 14 other state attorneys general in urging the court to require constitutional checks on CFPB authority. The CFPB “violates the separation of powers,” we wrote in our brief to the court, “and does so in ways that directly threaten the federal system.”

Most recently I submitted a brief to the U.S. Supreme Court, joined by Nevada Attorney General Adam Laxalt and Indiana Attorney General Curtis Hill, to repulse the CFPB’s attempt to trample on the sovereignty of States and American Indian tribes. Specifically, the CFPB recently claimed the authority to engage in invasive investigations of lending programs run by Indian tribes, as well as those run by states. In so doing, the CFPB rejected requests for a cooperative arrangement with the tribes, instead demanding that the Indian tribes accede to their regulatory predation.

Read the brief, here.

In the Federalist Papers, James Madison wrote that the “accumulation of all powers” in one person’s hands “may justly be pronounced the very definition of tyranny.” To ward off such accumulation, the Founders set up our national government’s checks and balances and its separation of powers among the three branches.

Each branch of government has a role in removing this excrescence from our constitutional system. The judiciary must affirm its previous ruling that Cordray’s limitless authority is unconstitutional. Once it does so, the president should exercise his constitutional prerogative to remove Cordray and replace him with a director whose actions are guided by humility and common sense. Most importantly, Congress must act to undo the unconstitutional usurpations that lie at the heart of the CFPB and within the Dodd-Frank Act that created it.