Dodd-Frank the most obnoxious of acts passed in the last twenty years. Many Republicans would like to see it rescinded. If that isn’t bad enough – the origins of this law was a proposal issued by then Professor ELIZABETH WARREN.
It was signed into law in 2010 as a “knee-jerk” solution to the financial crisis of 2008. There are over 2,300 pages of the act which brought the most significant changes to financial regulation in the United States since the Great Depression of the 1930’s. True to the push for “big government,” it not only established several agencies but cloaked them from transparency and normal business. It also gave them no sunset and provided funds far into the future for them to operate and regulate without congressional oversight or passage of laws. It required only a simple majority to pass into law but it has effected every financial institution since created. In total, the act added 225 new rules across a total of 11 federal agencies.
The initial version of the bill passed the House largely along party lines in December by a vote of 223–202. The Senate passed the act into law with 59 percent yeas and 39 percent nays. Maria Cantwell and Russell Feingold were the only Democrats smart enough to break with the pack and refuse to vote for it. Four Republicans betrayed their voters and sided with the Democrats: Susan Collins and Olympia Snowe of Maine; Scott Brown of Massachusetts; and Chuck Grassley of Iowa.
Notable agencies and rules just to name a few: the Volcker Rule; SEC to rule on “proxy access” ; reducing debit card interchange fees; Financial Stability Oversight Council; Office of Financial Research; Federal Insurance Office; Orderly Liquidation Fund; Orderly Liquidation Authority Panel; Consumer Financial Protection Bureau (CFPB); Wall Street Transparency and Accountability; strengthened and expanded the existing whistleblower program; SEC Office of Credit Ratings; and higher reserve requirements.
On June 9, 2017, The Financial Choice Act, legislation that would “undo significant parts” of Dodd-Frank, passed the House 233–186. It has been stuck in the Senate since then where it seems the Democrats are determined to make sure nothing gets done.
Consumer Financial Protection Bureau
What Is CFPB?
According to Wikipedia, former Director Richard Cordray said the Bureau’s priorities were mortgages, credit cards and student loans. It was designed to consolidate employees and responsibilities from a number of other federal regulatory bodies, including the Federal Reserve, the Federal Trade Commission, the Federal Deposit Insurance Corporation, the National Credit Union Administration and even the Department of Housing and Urban Development. The bureau is an independent unit located inside and funded by the United States Federal Reserve, with interim affiliation with the U.S. Treasury Department. It writes and enforces rules for financial institutions, examines both bank and non-bank financial institutions, monitors and reports on markets, as well as collects and tracks consumer complaints.
The CFPB was established as an independent agency. However a Court of Appeals opinion of 110 pages issued October 11, 2016 by Circuit Judge Kavanaugh – No. 15-1177 PHH Corporation, et al vs CFPB challenges that premise and its structure.
Page 9-10: The CFPB’s concentration of enormous executive power in a single, unaccountable, unchecked Director not only departs from settled historical practice, but also poses a far greater risk of arbitrary decisionmaking and abuse of power, and a far greater threat to individual liberty, than does a multi-member independent agency. The overarching constitutional concern with independent agencies is that the agencies are unchecked by the President, the official who is accountable to the people and who is responsible under Article II for the exercise of executive power. This new agency, the CFPB, lacks that critical check and structural constitutional protection, yet wields vast power over the U.S. economy. So “this wolf comes as a wolf.” Morrison v. Olson, 487 U.S. at 699 (Scalia, J., dissenting).
In light of the consistent historical practice under which independent agencies have been headed by multiple commissioners or board members, and in light of the threat to individual liberty posed by a single-Director independent agency, we conclude that Humphrey’s Executor cannot be stretched to cover this novel agency structure. We therefore hold that the CFPB is unconstitutionally structured.
Funding and Accountability:
So the Dodd-Frank Act is responsible for establishing the CFPB, but who funds the organization?
The Federal Reserve pays for CFPB. Each fiscal quarter the Federal Reserve transfers to the CFPB the amount of funds formally requested by the Director of the CFPB. In October 2017, the CFPB requested $217.1 million. It was granted without any trouble and only noting that the funds were transferred according to the congressional committees being notified. For the year 2017, they requested and received just over a half billion dollars in funds. But there were no attachments, no justifications, and no expectations for use of the transferred funds in either the request letter or the acknowledgement letter. It appears as a random check I did that they received about the same amount every year since 2012.
The 2011 request letter noted that the Treasury was to set up a group to track and monitor the activities of the bureau. However, if you recall, the Federal Reserve as a private, independent system which does not answer to congress or account for its activities to a federal IG group. So accounting by CFPB for their actions to the Treasury simply sends their transactions into a blackhole. The Reserve could continue its practice of handing over money, especially since neither appears on the surface to be accountable for their actions to citizens much less the federal government.
Why Is The Opinion issued in October So Important
Now that Cordray plans to leave, there is the opportunity to restructure the group to make it compliant with federal law and provide the opportunity for more transparency while having at least a minimum of congressional oversight.
USA Today 11/24/17: “Richard Cordray resigns as director of Consumer Financial Protection Bureau”
“The consumer watchdog leader alternately criticized by Washington conservatives and praised by advocates of tight financial industry oversight officially stepped down Friday, leaving President Trump with a temporary successor as he left. Richard Cordray, director of the Consumer Financial Protection Bureau, formally departed just over a week after announcing he would resign by the end of November. Later Friday, Trump named his budget director, Mick Mulvaney, as the acting director of the bureau.”
This has set off a firestorm today in Washington with the liberal Democrats to say the least. Especially since Richard Cordray chose a successor to his position. As soon as he heard the news, President Trump (who has already issued executive decisions to review Dodd-Frank and reduce the financial burden it has been imposing as well as its legal status in certain areas) acted to shift the emphasis of the CFPB and chose to appoint his own director. So even as Mulvaney arrived at the office there were a lot of outcries from irate Democrats and their mouthpieces in MSM.
Government Executive article 11/27/17 “Trump Budget Director Arrives at Consumer Bureau as Legal Clash Unfolds”:
“White House Budget Director Mick Mulvaney showed up for work at the Consumer Financial Protection Bureau across the street from the Old Executive Office Building in Washington at 7:20 on Monday morning, with a large bag of donuts in hand and minimal security. He was greeted by a handful of protesters from a consumer activist group called DefendCFPB, following a weekend of legal back and forth between the Trump administration and some—but not all–of the consumer agency’s staff. “
Then the DoJ weighed in on the situation according to the latest release from BizPak Review – “Trump has the power to take over liberals favorite agency and here’s the memo that has them seeing red”:
“The Department of Justice’s Office of Legal Counsel (OLC) released an opinion Saturday identifying President Donald Trump’s legal authority to name an interim director of the Consumer Financial Protection Bureau (CFPB), after the Obama-era director designated his own successor when he resigned last week.
“The office of Director of CFPB is filled by presidential appointment and with the consent of the Senate 12. USC 5491(b)(2). They expressed the opinion that the Federal Vacancies Act of 1998 5 USC 3345-3349(d) for reasons they enumerated gave him this ability to name a new director.”
Don’t get me wrong, I think this group has helped especially in the credit card area. But, given the findings of the DC Court of Appeals along with this opinion of the OLC, there can be no doubt in my mind that the CFPB has to be overhauled to be legally compliant with federal law and that there has to be much more accountability of this “so-called independent agency.”
Who better to revise and restructure than one already appointed and approved as Director of the Office of Management and Budget?
I think even if they get an emergency hearing in the Supreme Court, that the Court of Appeals opinion will more than likely be upheld.
And the liberals will be screaming louder into the night as they see all their carefully crafted plans to take over our country begin falling apart. Ohmmmm!