The CFPB Must Remember Its Role--Or Shut Down

The Consumer Financial Protection Bureau (CFPB) is in hot water again. According to in-depth coverage from the online edition of National Mortgage Professional magazine, Democratic members of the U.S. Senate have become concerned over the agency’s handling of consumer complaints related to the overly damaging Equifax data breach.

With more than 20,000 cases of complaints unheeded, according to Democratic Sens. Elizabeth Warren of Maine, Bob Menendez of New Jersey, and Brian Schatz of Hawaii, the CFPB has failed to properly fulfill its consumer protection responsibilities in the wake of the reverberating episode. In the 12-page “Breach of Trust: CFPB’s Complaint Database Shows Consumers Need Help After Equifax Breach,” report, the three progressive senators allege that the agency has failed to support consumers.

“The bottom-line is simple: consumers are reaching out to the CFPB to help them deal with Equifax-related problems at nearly twice the rate that they did before the recent data breach,” the report reads. “Tens of thousands of consumers have reached out to the agency with their concerns, including claims of inept customer service, difficulty securing loans or buying houses after identity theft, and outright fraud.”

The report adds: “As part of its duty to consumers, the CFPB must continue a full-throated investigation into the Equifax breach, including the company’s response and its efforts to work with consumers to mitigate the harm and repair any damage.”

Given the severity of the Equifax breach and how it rattled more than just the financial markets, I take these observations very seriously.

If an agency, in general, fails to serve the purpose it’s created for, then it doesn’t need to stay active. CFPB is one of the most divisive agencies in Congress and has damaging impacts on many industries and sub-industries across the U.S. economy. In an effort to be transparent, I’ve long been an advocate for its closure; however, if a harmful regulatory agency still exists then it needs to be led with accountability.

“This report does the math,” the senators wrote. “It analyzes data and individual complaints from the CFPB’s consumer complaint database in order to determine the extent of the impact of the Equifax breach on consumers, the effectiveness of the CFPB response, and whether this data justified a CFPB investigation.” The report does only reference media reports sourced by anonymous individuals, the accusations made would be damaging, destructive, and reason enough for internal inquiry if true.

Despite the failures of the CFPB’s actual performance in supporting consumers as alleged by these three senators, I do stand by my previous stance–a well-known one at that–in shutting down the agency. The editorial board for Investor’s Business Daily prominently focused on my previous commentary at conservative-leaning Daily Caller website by driving home this point, highlighting the following quote:

"Like every new government program, (CFPB) became a corrupt political bargaining chip in Obama’s administration with the sole mission to assert government supremacy over the economy," the editorial reads. “Nothing has changed since then.”

In totality, it’s my stance that CFPB has failed as an agency. Besides fumbling the Equifax fiasco, CFPB’s oversight and nearly unlimited power over the financial sector has been degrading. From the agency’s control over prepaid debit cards and the financial technology sector to its involvement with the controversial Obama-era Operation Choke Point, CFPB has done more harm to the economy than good.

President Donald Trump, though I rarely agree with him, has taken a proper policy approach to limiting the agency’s power. Through the collective efforts of industry groups and the Department of Justice, the removal of Richard Cordray (then-President Barack Obama’s last and most successful director of the CFPB) was one of the most influential regulatory drawbacks. In turn, the ascent of acting director Mick Mulvaney is a “Godsend” for the free market advocates of the world. Mulvaney had it right, in my view, when told Congress in an April 2018 hearing, “please take my power away.”