Federal banking regulators are expanding the power of the Consumer Financial Protection Bureau (CFPB), demanding records and testimony from higher-education accreditation agencies as part of an investigation into possible “unlawful acts and practices in connection with accrediting for-profit colleges.”
CFPB was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act to advocate for consumers.
Diane Katz, a senior research fellow in regulatory policy with The Heritage Foundation, says CFPB’s quest to expand its regulatory reach is nearly unstoppable.
“CFPB is, you know, perhaps one the most powerful agencies that has ever been created,” Katz said. “The problem is that there is no accountability or oversight by Congress. Their funding comes straight from the Federal Reserve, and it’s set in statute that they get a fixed percentage. There is no power of the purse. There’s no way that Congress can directly limit how they use funds. That’s one problem.”
‘All Over the Place’
Katz says CFPB was designed to expand beyond its original mandate into other aspects of Americans’ lives.
“Not surprisingly, they are all over the place,” Katz said. “Beyond even the scope of their very broad powers in Dodd-Frank, this is their problem: the way that their authority is described in Dodd-Frank, it gives them a lot of leeway. They’re allowed to regulate based on what the agency considers to be risks to consumers.”
Katz says CFPB’s intrusion into consumers’ lives is a direct threat to individuals’ privacy.
“They are also maintaining an enormous database of information on virtually every credit transaction by consumers,” Katz said. “By cross-referencing the different types of information they are collecting, it is easy to identify individuals. It is antithetical to very notion of consumer privacy.”
No Safeguards for Consumers
Brian Wise, a senior advisor with the U.S. Consumer Coalition, says CFPB is almost completely unaccountable to anyone.
“The CFPB is unique,” Wise said. “Congress doesn’t have the power of the purse over this agency. So, literally, when [Director Richard] Cordray goes to Congress to [give] his semiannual reports, it’s more out of a courtesy. It has nothing to do with control or accountability.”
Wise says CFPB is a growing threat to individual freedom.
“They have given themselves this power, and that is one of the biggest threats that the CFPB poses to consumer choice and freedom, that they are able to almost unilaterally expand their jurisdiction because there is nobody that is able to check that increased power,” Wise said. “They don’t fall under the U.S. Congress appropriations process, and there is really no oversight or accountability for their actions.”
Andrea Dillon ([email protected]) writes from Holly Springs, North Carolina.
Todd J. Zywicki, “The Consumer Financial Protection Bureau: Savior or Menace?” George Washington Law Review: https://heartland.org/policy-documents/consumer-financial-protection-bureau-savior-or-menace/