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New Evidence Reveals Vast Powers of Consumer Finance Bureau
Posted By Diane Katz On June 2, 2011 @ 10:15 am In Enterprise and Free Markets | 24 Comments
Tucked into the 232 pages of the May 31 Federal Register —the daily catalog of new regulation—was glaring evidence that the newly created Consumer Financial Protection Bureau (CFPB) will exercise nearly unlimited power over how Americans obtain credit and loans and manage their money. That it will do so absent accountability to Congress or virtually anyone else is an invitation to regulatory overkill.
Creation of the bureau was among the hundreds of new financing constraints imposed by the Dodd–Frank statute. It will assume policymaking and enforcement powers over credit cards, mortgages, and a host of other consumer financial products and services, exceeding the authority  previously wielded by seven federal agencies. In preparation for the formal transfer of control, the Treasury Department on Tuesday published a list of 32 major rules and orders that the CFPB will administer (in whole or in part) as of July 21. These include:
That’s a very tall order for any single agency. And concern  about the bureau’s reach is reinforced by the vague language of its statutory mandate. The CFPB It is empowered to punish “unfair, deceptive, and abusive” business practices. While unfair and deceptive have been defined in other regulatory contexts, the term abusive is largely undefined, granting bureau officials inordinate discretion.
Moreover, the CFPB’s status within the Federal Reserve, as well as the director’s fixed term of five years, effectively preclude presidential oversight, while even the Fed is statutorily prohibited from “intervening” in bureau affairs.
Nor will Congress have control via the purse strings: Bureau funding is set by law at a fixed percentage of the Fed’s operating budget.
The CFPB can be overruled only by the Financial Stability Oversight Council (composed of representatives from eight other financial regulatory agencies). However, even the council’s oversight authority is narrowly confined by statute.
Legislation  to tame the CFPB is pending in the House, but, although well-intended, it falls short of the necessary curbs. It is far better for Congress to rein in the CFPB before it formally assumes its excessive powers next month than to try and do so after the damage is done.
Article printed from The Foundry: Conservative Policy News Blog from The Heritage Foundation: http://blog.heritage.org
URL to article: http://blog.heritage.org/2011/06/02/new-evidence-reveals-vast-powers-of-consumer-finance-bureau/
URLs in this post:
 May 31 Federal Register: http://frwebgate1.access.gpo.gov/cgi-bin/PDFgate.cgi?WAISdocID=JMIvW4/1/2/0&WAISaction=retrieve
 exceeding the authority: http://www.heritage.org/Research/Commentary/2011/04/New-Consumer-Bureau-Will-Run-Free-of-Any-Leash
 concern: http://www.heritage.org/Research/Reports/2011/04/Reforming-Consumer-Financial-Protection-Bureau-Necessary-to-Protect-Consumers
 Legislation: http://thomas.gov/cgi-bin/query/z?c112:H.R.1121:
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