The Consumer Financial Protection Bureau’s (CFPB) acting director, Mick Mulvaney, recently announced the reduced regulatory oversight of payday lenders, placing trust in the free market instead.
Mulvaney’s move is long overdue. For years, former Director Richard Cordray’s CFPB churned out countless regulations targeting the business community, inundating employers with burdensome costs and time-intensive legal actions. Since its inception in 2010, the CFPB has issued more than $5 billion in penalties, punishing employers under the guise of “consumer protection.” In one recent year, credit unions alone saw a $7 billion regulatory hit, if you account for lost revenue.
Payday lenders, who provide short-term loans to low-income Americans, were especially vilified by Cordray’s CFPB. The agency’s so-called “payday rule”—which goes into effect next year—requires payday lenders to verify a borrower’s income, major financial obligations, and borrowing history before issuing any loan. The CFPB even issued a long list of “affordability criteria” to impose unreasonably high standards and lengthen the payday lending process.
The unintended consequences are dire for low-income borrowers, many of whom depend on payday loans to secure credit on short notice. Nearly one-third of Americans are “constantly” stressed about money, while an unexpected $500 expense would put most Americans in debt. Almost 60 percent of Americans do not have enough cash on hand to cover such expenses, making short-term credit all the more important. But the CFPB’s payday rule punishes those who provide it.
Moreover, the agency regulates outside the purview of Congress—and the American people. The CFPB receives annual funding as a fixed percentage of the Federal Reserve’s annual budget, keeping elected officials out of the appropriations process. The agency’s director can only be fired by the president and for just cause, a sobering fact given the CFPB’s history of discrimination allegations based on race, age, gender, and sexual orientation.
It’s no wonder the agency has been deemed “unconstitutional” by the judiciary branch. The U.S. Court of Appeals for the District of Columbia Circuit has described the CFPB as “unconstitutionally structured” and a “gross departure from settled historical practice.” In the words of U.S. Circuit Judge Brett Kavanaugh: The agency’s structure “poses a far greater risk of arbitrary decision making and abuse of power, and a far greater threat to individual liberty, than does a multi-member independent agency.”
Since its inception in 2010, the CFPB’s reputation has been shoddy at best. Last year, a federal judge in Atlanta sanctioned the agency for its conduct in a recent enforcement action against several debt collection agencies in Georgia and New York. U.S. District Judge Richard Story claimed the CFPB “willfully violated” his repeated instructions to identify the factual basis for its claims against the agencies.
Cordray himself was even threatened with contempt charges by the House Financial Services Committee. Why? Because of his “failure to honor his legal obligation to produce all records” in response to a committee subpoena.
The list goes on and on. Overzealous rulemaking is only the tip of an iceberg that contains discrimination allegations, legal sanctions, and congressional threats of contempt.
It’s about time the CFPB was held accountable to the rest of us. Thank you, Mick Mulvaney, for doing your job.
Gregory T. Angelo is the president of Log Cabin Republicans, the country’s premier organization representing LGBT conservatives and straight allies.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.