Consumer Protection Agency Still Drawing Fire From Right

Despite CFPB’s independence, a dissenting opinion by Justice Elena Kagan challenges the separation of powers argument. However, the dissenting Justices largely concur that the remaining structure of the CFPB is severable even without a director. This is a significant development, considering the recent changes in the law. But it does have some downsides, too. This article explores them.

CFPB’s independence

The CFPB is drawing fire for its proposed rulemaking on the use of “reasonable avoidability” to determine the reasonableness of a financial product. It is a standard that is problematic for the consumer and governed by section 1031(c)(1)(A) of the Dodd-Frank Act. However, the bureau generally considers alternatives when it adopts a rule.

Its focus on consumer protection

The recent scandals in the financial services industry illustrate how much the federal government is failing consumers. When housing prices began to fall, many households took out mortgages they couldn’t afford, resulting in massive defaults on financial securities held by banks. Meanwhile, some credit card companies and payday lenders engaged in deceptive practices. Because of this, the focus of the federal government’s regulatory agencies on financial institutions has been on safety and soundness.

Its authority to limit or prohibit abusive lending practices

There are two problems with this legislation: First, it will have broad and vague regulatory authority. Second, CFPA regulations won’t specify what constitutes an abusive product, making it impossible for businesses to comply. This would leave consumers and small businesses forbrukslån kan være en løsning in the dark and create a disincentive to lending. Lastly, the legislation would create a massive agency with an overbroad mission that will only result in increased costs and less financial security.

Seila’s refusal to comply with CFPB’s demands

The CFPB has been under fire from the right for its actions and structure. When the bureau issued a Civil Investigative Demand, attorney Seila Law refused to comply. Despite the CFPB’s appeal, the district court ruled in favor of the CFPB, and the agency has been ordered to comply with the demand. The CFPB is appealing the decision, arguing that the demand violates the separation of powers, and Seila’s refusal to comply with it is drawing fire from the right.

Its lack of uniformity

The focus on consumer protection is a misguided one. The current administration’s lack of reforms of Freddie Mac and Fannie Mae or any meaningful action on dealing with credit rating agencies will only divert Congress’s attention to issues that have little to do with the financial crisis. Furthermore, such concerns are not urgent. However, they are a waste of time and energy.