Gerard Scimeca – Chairman, CASE
October 5, 2018 – https://washex.am/2DYX2t2
President Trump’s nomination of Kathy Kraninger to head the Consumer Financial Protection Bureau won’t come anywhere close to the gut-wrenching sensationalism of the Supreme Court nomination process currently consuming Washington. But the battle lines being drawn in Washington are nearly as ominous.
It taxes one’s memory to think of a hotter partisan turf war over an “alphabet soup” agency. This reality is punctuated by the fact that the CFPB, already outside the control of Congress, attempted to sidestep Trump’s executive authority by choosing its own head to succeed former director Richard Cordray when he stepped down. This rogue-agency mentality is at the heart of why the CFPB must be reformed and why Kraninger is the ideal candidate to reform it.
In August, Kraninger won approval from the Senate Banking Committee by a 13-12 vote along partisan lines. Democrats, led by Sen. Elizabeth Warren, D-Mass., savaged Kraninger as both an unqualified minor administrator, and, contradictorily, a key figure behind Trump’s controversial border policy.
Despite unloading both barrels and having failed to derail the nomination, Warren and her band have vowed to fight on until the final Senate vote. U.S. consumers should hope they fail.
Warren is obviously territorial over the CFPB. She spearheaded its creation as a response to the financial crisis of 2008. But since that time the agency has acted as a regulatory leviathan, repeatedly acting outside its statutory authority, leveling businesses and industry with heavy-handed regulations and arbitrary fines that raise costs on financial services and limit consumer choice. Meanwhile the CFPB has racked up a rap sheet of wanton financial extravagance at taxpayer expense.
The bureau that Warren champions has been an absolute haven for bureaucratic extravagance, and a cash cow for the well-connected. Salaries average over $132,000 for its more than 1,600 employees, more than $50,000 above that of an average federal worker. Over 240 employees at the agency enjoy salaries higher than all 50 state governors. Because their budget is set independently by the Federal Reserve, Congress has no control over the agency’s operations or finances.
And because the bureau lacks oversight, they are free to act however they please. The inspector general at the Federal Reserve Board has sharply criticized their exorbitant spending as financially unsound.
This is the agency Warren and her supporters champion as the watchdog of the financial services industry, and when Senate Democrats take aim at Kraninger, this is the corrupt bureaucratic culture they will be defending.
Despite the gross financial excess, what’s most concerning is the unfettered power the CFPB wields in issuing regulations, unilaterally deciding what rules to impose on private industry, whom to target, and what the penalties will be. From the time the Bureau was created until Mick Mulvaney took the helm as acting director last November, the CFPB harassed and prosecuted industries such as auto lenders, credit card plans, payday lenders, credit bureaus, and providers of education loans, which had absolutely no role in creating the financial crisis that led to the CFPB’s creation.
It took a panel from the D.C. Circuit Court of Appeals to slap down CFPB for exceeding its lawful powers. Further, the fines the bureau levied were largely kept in a political slush fund to promote Democratic ideology, as injured consumers who were supposed to be their primary concern were largely ignored.
Kraninger, as a protege of Mulvaney, will bring much needed restraint and reform to this unaccountable, run-amok institution. Though Mulvaney moved quickly to initiate reforms, after more than six years of heavy activism under Cordray, there is still a huge mess to be cleaned up.
Kraninger has proven herself both through her sterling reputation and restrained demeanor as the ideal candidate to end the zealous targeting of private industry and continue the CFPB along a path of reasonable and consumer-friendly oversight of the financial services sector.
The real danger to consumers isn’t a CFPB run by Kraninger, but one that continues its indefensible business as usual; wreaking regulatory havoc across our economy, pushing an aggressive anti-business agenda, and lining the pockets of left-wing political allies. Her confirmation will set a new course where the CFPB will be limited and focused in its consumer protections, serving the interest of the public, and not an extreme regulatory agenda that abuses its power and only costs consumers more.
