When President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act on July 21, he also created the Consumer Financial Protection Bureau (CFPB), and along with it, perhaps the most powerful agency head in the history of the American bureaucracy.
According to one financial expert, who wanted to remain unnamed, the amount of power the director of the CFPB would assume is “so significant it may be unconstitutional.”
Appointed by the president and approved by the Senate for five-year terms, the director of the CFPB will have almost unlimited authority to regulate consumer issues and call the shots for banks and other lending firms.
To top it off, the director will only be supervised by two boards- the Consumer Financial Protection Oversight Board and the Consumer Advisory Board. Both will comprise of members appointed by none other than the director.
“I am not familiar with an institution that gives so much power to one person,” Todd Zywicki, law professor at George Mason University, told The Daily Caller.
Zywicki also pointed out the fact that the director of the CFPB does not even have to go to Congress for the agency’s budget — something every other bureaucratic agency is required to do. At the CFPB, all the director has to do is submit a budget to the Federal Reserve.
“As long as it’s less than 12 percent of the Fed’s revenue, it’ll be approved,” said Zywicki. “Basically, this director can do whatever he or she wants with only limited review.”
The question now is who President Obama will appoint to fill the position. Top candidates include Harvard law professor and head of the Congressional Oversight Panel, Elizabeth Warren; the Treasury’s assistant secretary for financial institutions, Michael Barr; and Justice Department official Eugene Kimmelman.
A Warren appointment seems likely, though she is also the most controversial. Favored by Democrats, consumer groups and unions, she is ardently opposed by Republicans, financial institutions, and lobbyists in the banking industry. President Obama has yet to give any real indication of who he will nominate.
Whoever the candidate is, he or she will have tremendous authority to not only shape the direction of the CFPB as a new agency, but also to create new rules and regulations banks, credit card companies and nonbank institutions that provide financial products will have to comply with.
According to Garett Jones, Economics Professor at George Mason University, that sounds a lot like another government institution: Congress. Except instead of 535 members, there is only one.
“We should really think of CFPA as a new legislature,” Jones told The Daily Caller. “That means we should be judging any candidate not just on technical competence, but also on their political views and policy views. Just as we scrutinize a governor’s Senatorial appointments, we should scrutinize the Senate’s approval of this new legislator.”
“That putting this kind of power in one person is good for consumers — I’d like to see that proven,” said Zywicki. “This agency should have been strangled in its cradle.”