Tag Archives: Consumer protection

Who Runs This Agency?

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Yesterday The Washington Examiner reported that the Supreme Court has agreed to take up a dispute over the constitutionality of the Consumer Financial Protection Bureau in a case that could dramatically scale back the agency’s authority to police financial markets or eliminate it altogether. The Consumer Financial Protection Bureau (CFPB), considered to be the brainchild of Senator Elizabeth Warren, was created in 2010. It was one of a few misdirected responses to the housing bubble that burst in 2008.

Just for the record, I want to review a few facts about the financial collapse of 2008 that the mainstream media somehow missed.

The following video was posted at YouTube in September 2008. The video was essentially a campaign ad, but the information in it is important. The CFPB never addressed the actual problem. (For that matter, neither did Dodd-Frank). The video below tells a story you might not be familiar with:

 

The article reports:

The court said Friday it will hear a challenge from a California-based law firm that argues the CFPB, the brainchild of Sen. Elizabeth Warren, a Massachusetts Democrat, is unconstitutionally structured.

Opponents of the CFPB, created in 2010, argue that its structure violates the separation of powers, as Congress gave it broad authority to regulate mortgages, credit cards, and other consumer products, and is helmed by a single director who can’t be removed by the president except for cause.

The court said it will also address whether the entirety of the law that created the CFPB, the Dodd-Frank Wall Street Reform and Consumer Protection Act that re-ordered the financial regulatory system, should be struck down.

The Trump administration said in a filing with the Supreme Court it concluded the “statutory restriction on the president’s authority to remove the director violates” the Constitution, and “the director of the bureau has since reached the same conclusion.”

Trump tapped Kathy Kraninger to replace Mick Mulvaney, the acting CFPB director, last year.

Congress set up the CFPB as part of the Dodd-Frank financial reform package, and its director is appointed by the president and confirmed by the Senate. The director serves a term of five years.

Cases challenging the constitutionality of the agency have been weaving their way through the lower courts. In 2016, Justice Brett Kavanaugh, then a judge on the U.S. Court of Appeals for the District of Columbia Circuit, said in a ruling in a similar case the CFPB is a “gross departure from settled historical practice.”

Stay tuned. A decision is expected by the end of June.

It’s Time To Get Rid Of A Bad Idea

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On Friday, Investor’s Business Daily posted an article about plans by Republicans to redo some of the reforms put in place after the 2008 housing bubble crash.

The article reminds us of the lies that were told in order to create the Dodd-Frank reforms and the Consumer Financial Protection Bureau (CFPB).

The article reports:

One of the great follies of the 2010 Dodd-Frank reforms is that it let Democrats pretend that “Wall Street greed” was to blame for the financial crisis. In a brilliant bit of jujitsu, Democrats used that false narrative to create a mass of new regulations — and a new super-regulator, the CFPB, giving it sweeping, near-dictatorial and likely unconstitutional regulatory control over nearly all lending in the U.S., from major mortgage lenders to payday lending shops.

It was created under false pretenses. The fact is, government, not Wall Street, was to blame for the crisis. Research by Edward Pinto, former executive vice president and chief credit officer for Fannie Mae, found that by 2008 more than half of all mortgages in the U.S. were subprime or otherwise risky, and 76% of those were on government agencies’ books. And it is an indisputable fact that, from the Clinton administration on, government regulations required banks to lend to uncreditworthy borrowers, or face stiff penalties.

“This leaves no doubt that government housing policies — and not a lack of regulation — created the demand for these risky mortgages,” wrote American Enterprise Institute Senior Fellow Peter Wallison, who sat on the government’s 2009 Financial Crisis Inquiry Commission, the official investigation into the crisis.

The article reminds us that since the creation of the CFPB in 2010, there has been a near-decade long credit slump which has crippled the nation’s financial industry. Both Dodd-Frank and the CFPB have severely hurt economic growth in America.

The article concludes:

We’re happy to see that Congress wants to seriously reform the CFPB. We’d be even happier if they just got rid of it.

That is a wonderful idea.

For an honest history of the housing bubble, I strongly recommend this video: