• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Obama Confirms Unaccountability of Consumer Bureau

    U.S. President Barack Obama shakes hands with his recess appointee Richard Cordray (R) as head of the country's new consumer financial protection watchdog, sidestepping Republican congressional opposition to his pick during a trip to Cleveland, Ohio January 4, 2011. REUTERS/Kevin Lamarque

    By circumventing the lawful confirmation process, President Obama’s attempted “recess appointment” today of Richard Cordray to direct the Consumer Financial Protection Bureau (CFPB) demonstrates the very unaccountability that pervades the agency and requires reform.

    Although operational now, the CFPB has been largely confined to enforcing existing regulations, without authority to impose new rules until a bureau director is in place. But so eager was the President to unleash the bureau’s regulatory muscle that he chose to test the outer limits of his constitutional powers to make appointments during the supposed recess of the Senate. In addition to constitutional problems with the manner in which this was done, Obama has contributed to the lack of accountability that infuses the bureau structure.

    Spawned by the vast Dodd–Frank financial regulation statute, the CFPB enjoys sweeping powers over all manner of consumer credit, including consolidated and expanded authority over consumer financial products and services previously wielded by seven federal agencies. We’re talking credit and debit cards, mortgages, student loans, savings and checking accounts, and more. Essentially, all consumers’ money falls under bureau purview unless it’s under a mattress.

    The CFPB is ensconced within the Federal Reserve, with its funding set by law at a fixed percentage of the Fed’s 2009 operating budget—increasing from 10 percent in 2011 to 12 percent in 2013. Therefore, its budget is not subject to the same level of congressional control as most other federal agencies. Congress should change this budgetary gimmick, which limits congressional oversight of the agency. Moreover, the Fed is statutorily prohibited from “intervening” in bureau affairs.

    Bureau accountability is also minimized by the vague language of its statutory mandate. 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 the CFPB officials inordinate discretion.

    Bureau proponents deny any lack of accountability, claiming that the CFPB can be overruled by the Financial Stability Oversight Council, which is composed of representatives from eight other financial regulatory agencies. However, the council’s oversight authority is narrow, confined by statute to cases in which CFPB actions would endanger the “safety and soundness of the United States banking system or the stability of the financial system of the United States.” Any veto of CFPB action would also require the approval of two-thirds of the council’s 10-member board.

    These sweeping and virtually unconstrained powers of the CFPB would be a matter of concern no matter who heads the agency. Indeed, 44 Senators blocked the confirmation vote on Cordray to highlight the need for structural reforms of the bureau. Now that Obama has demonstrated how little accountability will attach to the bureau, such a restructuring is needed now more than ever.

    Posted in Featured [slideshow_deploy]

    6 Responses to Obama Confirms Unaccountability of Consumer Bureau

    1. AD-RtR/OS! says:

      "…He has erected a Multitude of new Offices, and sent hither Swarms of Officers to harrass our People, and eat out their Substance…"

      I suppose the corrective will take the shape of the previous one as it was quite effective; and to this end, "…we mutually pledge to each other our Lives, our Fortunes, and our sacred Honor."

    2. Lloyd Scallan says:

      We said months ago, "the mask is coming off". Now, it's completely off. We must recognize what Obama is and has always been. He must be stopped.

    3. Mike, Wichita Falls says:

      If we are so blessed as to return Barack Obama to private life in a little over a year from now, and nothing else is done on the domestic front, repealing Obamacare and Dodd-Frank would almost be enough for me.

    4. American Thinker says:


    5. Ken says:

      It starts at the top. The first thing Congress needs to do is impeach President Dictator Obama. We simply cannot afford to wait until the November election to get rid of this scourge. The second thing Congress needs to do is repeal Obamacare followed closely by the third: repeal Dodd/Frank. Failure to do any of these things will further imperil the country and its citizens.

    6. Dan says:

      It's not just Obama, it's congress on both sides of the aisle who love to create departments that write their own rules and regulations and impose them on the people with little to no oversight. Congress has run over the Constitution for so long it's beyond redemption. Is there any way back? When the Constitution says "congress shall make no law" they simply get around it by letting departments create the laws and courts uphold them. Not entity outside of congress should be allowed to write a rule or regulation and impose it on the people. If a department wants a new rule or regulation then it should go back through congress to get it approved. We have faceless and nameless individuals within government departments governing us.

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.