There’s an argument to be made that the Orwellian-named Consumer Financial Protection Bureau (CFPB) should be completely scrapped, but the courts have made it notoriously difficult to unwind major governance problems at the CFPB.
And getting enough votes in Congress could prove difficult to completely dismantle the CFPB. Given the current realities, there is a valiant effort by some conservatives to boldly reform CFPB: if it can’t be ended, then make it better through more oversight and supervision.
The CFPB, part of the Dodd-Frank regulatory regime adopted by Democrats in 2010, is an agency meant to protect consumers in the financial sector by regulating and enforcing rules. That mission has been stretched to include stopping racism and anti-woman bias against consumers. Yet, the agency ran rampant with internal racism and anti-woman bias, according to the General Accountability Office (GAO), the investigative arm of Congress.
Strong proposals for CFPB reform would clarify the Bureau’s authority over unfair, deceptive, or abusive acts and practices (UDAAP). A bill toward this end introduced by Rep. Andy Barr (R-Ky.) would bring regulatory certainty for financial institutions and credit providers by requiring the CFPB to define the term “abusive” under the Dodd-Frank Act.
“For far too long, financial institutions have been left in the dark due to the CFPB’s failure to provide a clear and consistent definition of what constitutes an ‘abusive’ act or practice,” Barr said in a statement announcing his bill. “This regulatory ambiguity leads to decreased innovation and reduced access to credit, which ultimately harms consumers by reducing their choices and increasing costs. My legislation will bring much-needed transparency to the CFPB’s UDAAP authority, ensuring financial institutions can serve their customers without fear of arbitrary enforcement actions.”
Another priority for reforming the CFPB would be to create a bipartisan commission structure instead of one single director. For all of the “No Kings” protests by the Left this year, they want the CFPB to run more like a dictatorship than a collaborative, contemplative leadership team. (There’s also the irony that anyone protesting against a king is inherently not living in an authoritarian monarchy.)
An additional CFPB reform would strengthen the agency’s accountability and transparency by requiring independent retrospective reviews of major rules. The CFPB under past administrations is known for ramming through damaging changes without proper oversight of how new rules harm consumers.
For example, the Biden CFPB teamed up with the Biden Justice Department to punish lenders/financial institutions for denying applications based on immigration, a move that would create more risk in the financial system and raise prices for everyone.
Borrowers and lenders deserve better. Placing stronger controls through independent assessment will ensure that the longtime pattern of bias against businesses–including many small businesses with scant ability to comply with regulatory red tape–stops now.
Commonsense CFPB reforms will help create a more stable regulatory environment, which in turn allows banks, credit unions, and other financial service providers to better meet their customers’ needs while maintaining strong consumer protections.
Former President Ronald Reagan said it best: the closest thing to eternal life is a government program. If the CFPB is going to remain in place, the best thing our leaders can do is ensure that the CFPB actually helps Americans rather than hurts them.