Washington's Worst Government Agency: The Consumer Financial Protection Bureau

Washington, April 3, 2017 - Independent Journal Review
By: Richard Berman

Washington, D.C. is known for many things: Majestic monuments, smoky steakhouses, and wasteful bureaucracy at its worst. From the Environmental Protection Agency's crippling regulations to the Pentagon's $125 billion boondoggle, the swamp is full of critters. But no government agency is creepier or crawlier than the Consumer Financial Protection Bureau (CFPB).

It starts with the CFPB's structure. Normally, government agencies like the State Department and Environmental Protection Agency are overseen by Congress, which determines funding levels and monitors agency leadership for any red flags. Not so with the CFPB.

Created by the Dodd-Frank financial law in 2010, the agency receives its annual funding automatically as a portion of the Federal Reserve's budget, leaving Congress out of the appropriations process. Its director, Richard Cordray (pictured above), is a White House appointee who can only be fired by the president for cause, such as malfeasance or negligence.

Don't just take it from me. The Department of Justice (DOJ) recently filed court papers asking a federal appeals court to order the restructuring of the CFPB. The DOJ argues that the agency’s structure comes into a separation-of-powers issue, since Cordray isn’t sufficiently answerable to the president. In the DOJ’s words: “There is a greater risk that an independent agency headed by a single person will engage in extreme departures from the president’s executive policy.” The Justice Department also argued that the president should be able to fire Cordray at will.

Last year, the U.S. Court of Appeals for the District of Columbia Circuit described the CFPB as “unconstitutionally structured” and a “gross departure from settled historical practice.” The appellate court similarly ruled that Director Cordray possesses too much power. The agency's lack of accountability is so unprecedented that, this month, the House Financial Services Committee held a hearing called “The Bureau of Consumer Financial Protection’s Unconstitutional Design."

Then there's the politics. In 2016, the CFPB sent $16 million to GMMB - a Democratic consulting firm - to publicize the agency’s marketing materials. Jim Margolis, a senior partner for GMMB, served as a senior adviser to President Obama and Hillary Clinton’s 2016 campaign. Contracting almost exclusively through Margolis’ firm, the CFPB’s advertising spending represents 2.5 percent of its annual budget - eclipsing the Food and Drug Administration’s 2 percent annual budget. (Most federal departments and agencies spend less than 1 percent of their budgets on advertising.)

The eight-figure marketing budget makes you wonder: Why do most Americans know nothing about the CFPB? In a recent national telephone survey, 81 percent of respondents claimed they they didn't even know enough about the agency to form an opinion about it. Even Rohit Chopra, a former CFPB assistant director, admits that the agency doesn’t have “the most effective PR strategy.”

But the CFPB marches on, retaining Democratic consultants. Agency staffers are clearly on board: According to a review of Federal Election Commission data, 100 percent of campaign contributions made by the agency’s employees went to Democratic candidates in 2016. Consequently, the CFPB is tied for the country’s most politically biased federal entity - alongside the National Endowment for the Humanities, National Transportation Safety Board, and Peace Corps. Even the Obama administration’s Justice Department was more diverse in its political makeup.

The swamp has no need for rogue bureaucracies. Let's drain it.

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