In 2010, President Obama and his liberal allies passed the Dodd-Frank Act, which enshrined “too-big-to-fail” into law and made Wall Street bailouts permanent. Their compulsion to enlarge government and give more power to Washington bureaucrats also resulted in the creation of a dangerously unaccountable regulatory agency known as the Consumer Financial Protection Bureau, or CFPB.
If you don’t know the name of the agency, you likely soon will. And you should, because the CFPB’s unprecedented power and authority mean that it will affect your financial lives whether you realize or not. The CFPB is authorized to prescribe rules and issue orders over any entity that “poses risks to consumers with regard to the offering or provision of consumer financial products or services.” This mandate could be construed to include financial advisers such as Dave Ramsey, a mortgage from your community bank, or even a tractor dealer leasing out rigs.
One thing is certain: when the federal government, or more specifically the CFPB, gets involved in these transactions with new regulations, Arkansans’ costs will go up.
Fortunately, this week in the House Financial Services committee my colleagues and I approved a number of reforms to the CFPB that would bring some accountability and transparency to the monstrous regulator. These reforms are critical because, as it stands, the agency has zero accountability. Further, the CFPB has almost no congressional oversight, and has vast, undefined power concentrated in the position of a single director who is appointed by President Obama.
Our founding fathers could never have conceived of such a potentially rogue entity within the federal government; the checks and balances set up by our Constitution were apparently not even an afterthought to the Washington Democrats who set up the CFPB.
The reforms passed this week, which I hope will soon be passed by the full House and then considered in the Senate, include common-sense ideas like changing the leadership structure of the CFPB to a five-member bipartisan commission (consistent with other financial regulators); bringing the CFPB under the normal appropriations process and placing its employees on the regimented federal employee pay scale; and prohibiting the CFPB from secretly tracking consumers’ financial information such as credit or debit card transactions.
If they are truly interested in protecting consumers, President Obama and his allies in the Senate will set aside ideology and support these simple reforms. Arkansans are best served when we respect their personal choices, foster competition, innovative and transparent markets.