op-ed

CHOICE Act Will Put The Brakes On Rogue Bureaucrats At CFPB

John Nestor is the quintessential federal bureaucrat gone rogue. Although he was a medical officer with the FDA, Nestor’s calling of choice was vigilante of highway speed enforcement. When driving around the Beltway, he would pull into the passing lane and set his cruise control to 55 mph – inevitable honking be damned.

Nestor didn’t care that he had no authority to do this, and he didn’t realize that he was actually endangering lives – speed doesn’t kill, speed variance is what kills. He believed he had a divine mission and no one was going to slow him down. (Or speed him up, I suppose.) His spirit of self-appointed guardianship of mankind extended to his day job at the FDA, where he refused to approve a single new drug in more than four years, so the FDA canned him.

Nestor was a bureaucrat out of control. He thought his cause was righteous, but it wasn’t and neither was he. He acted without accountability or respect to the people he was supposed to serve.

A very similar phenomenon has been going on in Washington for the last few years – federal bureaucrats acting in a nakedly political fashion, answerable to no one, all while claiming to be righteous.

The innocent-sounding Consumer Financial Protection Bureau (CFPB) was set up after the financial crisis to act against retail financial exploitation, such as by predatory lenders. That’s a great goal, but its implementation has been pretty predatory itself – as the Caller reported on recently in great detail.

The CFPB operates outside of traditional government authority, with funding from the Federal Reserve rather than the Administration or Congress and no budgetary transparency. Unlike most federal agencies, which take their marching orders from the Administration and Congress, the CFPB has broad powers to both create and enact policy. Those powers are so broad that one judge ruled the CFPB unconstitutional.

But there’s still a lot of damage to undo, while the serving the needs of consumers in a more ethical way.

One example is the CFPB’s rule to “protect” consumers from payday loans. Payday lenders, sometimes called loan sharks, get a bad rap because many of them leverage an information advantage to exploit desperate, vulnerable people.

That’s a good goal – but CFPB’s rule to help these folks is an impossible 1,690 pages long. (Don’t click on that link unless you’ve got the bandwidth – seriously it’s a 1,690 page long PDF.)

Anything that arcane and involved is beyond the grasp of most people, as Forbes contributor Nick Clements points out in an excellent critique of the rule. So those who need payday loans will first have to see lawyers — professionals who get a bad rap because many of them leverage an information advantage to exploit desperate, vulnerable people.

It’s easy to see the Democrats’ fingerprints on any rule like this. It’s “welfare for lawyers,” as Dilbert creator Scott Adams described it when endorsing Donald Trump, because lawyers like to give to Democrats.

Payday loans are not evil, at least not any more than a 65 mph speed limit. People use them because they can’t access capital any other way. If such loans are really that bad, Clements continues, they should just be banned or the government should help make the market for them cheaper.

“This does neither,” he says very succinctly.

State authorities have also rebuked the CFPB for over-riding their jurisdiction. Recently 15 state Attorneys General signed a letter against the rule, which pre-empts regulation state legislators have crafted based on decades’ worth of experience with their constituents. State leaders are a lot closer to the consumers that the CFPB is supposed to be protecting, so maybe they have some good ideas.

To make the CFPB more accountable and transparent, Rep. Jeb Hensarling (R-Tex.) has introduced, and the House has passed, the Financial CHOICE Act. With luck, that will pass the full Congress soon.

As Mercatus Center fellow Brian Knight summarizes, the bill will change the organization’s name to Consumer Law Enforcement Agency (CLEA), and strip it of its broad prospective of regulation. It will be a normal federal agency. It won’t be an independent regulator or part of the Federal Reserve. Instead of enacting political ideology without accountability, CLEA’s purpose will be “strengthening participation in markets…without Government interference or subsidies, to increase competition and enhance consumer choice.”

Sounds great. The rogue bureaucrats at the CFPB have been blocking the passing lane for too long. Time to pull them over.

Jared Whitely is a political and cultural observer.


The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.