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How Can We Fix The CFPB? Shut It Down

Regulation: The Consumer Financial Protection Bureau's very name suggests its job is protecting you, the American consumer. Nothing could be farther from the truth. Now, a new study documents the agency's many problems and makes a modest proposal: Shut the CFPB down. We agree.

The CFPB arose from the 2010 Dodd-Frank reforms as a kind of super-regulator for all consumer finance. The Democrats who passed that bill used it to bludgeon Wall Street for its "greed" and to blame the banking industry for the 2007-08 financial crisis. But the CFPB has failed miserably at its job.

"The Consumer Financial Protection Bureau was set up under the Dodd-Frank Act of 2010 in violation of constitutional norms ostensibly to protect consumers from bad actors in the banking and financial services industry, but the agency is instead actively harming consumers, pressing ahead with regulations even when the benefit to consumers is likely to be outweighed by the costs," wrote Iain Murray, vice president for strategy at the Competitive Enterprise Institute, in a new study titled, "The Case against the Consumer Financial Protection Bureau: Unconstitutionally Structured and Harmful to Consumers.".

Murray cites as a recent example the "huge $185 million fine the Bureau levied on Wells Fargo Bank for the 'upselling' scandal," in which bank staffers misled customers to open new services accounts or simply opened credit accounts in their names without telling them.

CFPB was created to prevent such things. But it didn't even find out about it until the media reported the incident. Then, in a compensatory show of toughness, it slapped that big fine on Wells Fargo. But guess who really pays for that? Not Wells Fargo, but the very customers who were victimized by the behavior, "exactly the people the Bureau was supposed to protect," said the study.

The CEI report goes through a litany of ills at the CFPB, "ranging from the lack of congressional oversight over the agency's $650 million budget and operations, to its trampling on consumer privacy and First Amendment free speech rights, to its failure to protect consumers from harm."

Quite a list of charges for an agency just over six years old. But maybe we shouldn't be too surprised; the CFPB, after all, was the brainchild of far-left progressive Massachusetts Sen. Elizabeth Warren, who has seemingly never seen a costly, job-destroying regulation, tax or rule she didn't like.

To its credit, in addition to documenting CFPB's many failings, CEI has a lawsuit pending that challenges the very constitutionality of the agency and its creation. We wish them luck.

In the meantime, President Trump has already begun to clip CFPB's wings through executive orders. As we noted way back in February of this year, the Obama-era CFPB serves no good purpose and thus has no reason to exist. Congress should shut it down.

RELATED:

Make American Finance Great Again 

Don't Reform The CFPB — Shut It Down 

Elizabeth Warren's CFPB: This Is Progress? 


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