According to a report from the American Action Forum, the Consumer Financial Protection Bureau (CFPB) is the fastest rulemaking body in the federal government. In the 5 short years that the agency has existed, it has issued nearly 50 rules at a rate 3.5 times faster than any other government agency. The CFPB has quickly become synonymous with the overkill regulatory mindset that Washington is known for. Having unelected bureaucrats make rules and regulations without the input of the American people will not benefit consumers, but harm them.

The CFPB was born out of the Dodd-Frank Act, passed in 2010 in response to the financial crisis. Much like other provisions of Dodd-Frank, such as the Volcker Rule and the Durbin Amendment, the CFPB was intended to protect consumers and promote financial stability. However, again like much of Dodd-Frank, the CFPB has done nothing but burden American consumers and businesses with additional costs.

Of the nearly 50 rules that the CFPB has imposed, according to the report, 26 of them have directly resulted in “$2.8 billion in costs with an associated 16.9 million in paperwork burden hours”.

Additionally, with such a fast pace of rulemaking there will undoubtedly be errors. In the CFPB’s case that means an error rate of nearly 25 percent, meaning that of nearly 50 rules that the CFPB has passed, they have had to issue 13 corrections. This agency is a prime example of what happens when unelected bureaucrats are not held accountable and are given complete autonomy.

The CFPB is given this broad mandate and invested with a large amount of regulatory power, but is not subject to Congressional oversight. This large, bureaucratic agency thus has the power to affect millions of Americans however it sees fit with no avenues for retribution from consumers or Congress

Earlier this year, the CFPB proposed a new rule to regulate short-term lending. These added restrictions and regulations, according to one article, will “force thousands of small businesses to shutter, but also severely restrict the availability of credit for millions of Americans”. This is just one of the many rules that the CFPB has unilaterally implemented that will hurt hardworking Americans and American businesses.

Representative Jeb Hensarling (R-Texas), Chairman of the House Financial Services Committee, recently issued a statement about the CFPB’s leadership as “neither elected nor accountable to the American people”. The purpose of the CFPB is to make sure that financial products and services that Americans depend on every day work better for them. But how can unelected bureaucrats know what is best for the American people? The answer is that they cannot.

Hensarling’s sentiment, and the sentiment of many CFPB opponents, was further validated this week when the Washington D.C. Court of Appeals ruled the structure of the CFPB to be unconstitutional. The court found that the director of the CFPB, Richard Cordray, “enjoys significantly more unilateral power than any single member of any other independent agency” and that he is the “single most powerful office in the entire United States Government.”  

Fortunately, a handful of lawmakers are now looking at ways to fix the CFPB and make it more accountable. Last month the House Financial Services Committee approved H.R. 5983, the Financial CHOICE Act, introduced by Representative Hensarling.

This piece of legislation undoes much of Dodd-Frank, but most importantly it turns the director of the CFPB into a bipartisan commission subject to congressional oversight. Thereby subjecting the CFPB to Congress, the true representatives of the American people. It adds transparency and makes bureaucrats accountable to the American people.

Such reform efforts by Hensarling and other lawmakers are greatly needed and justified given the rampant rule making the CFPB has subjected American consumers to, and the recent ruling by the D.C. Court of Appeals.


Photo Credit: Christian Schnettelker