For accountability

Agency must be reined in

Washington, D.C.’s idea of government may have changed, but the American people’s has not. This is a significant observation I have made since returning to Washington after living and working for 25 years in central Arkansas.

In Washington, accountability has gone from a focal point of governance to a relative afterthought.

The rest of America doesn’t approve of Washington’s dismissal of accountability. When I’m home in Arkansas, I haven’t met very many people—if any—who have told me they don’t agree with the idea that our government needs to be accountable to the people; likewise, I haven’t met many people who said they disapprove of our constitutional system of checks and balances.

Yet inside “the Beltway” of our federal government, there is this inexplicable movement to enshrine anti-accountability policies and agencies into law. When I was a young Senate staffer in the 1980s, accountability was a fully and wholly bipartisan endeavor. In 2017, now even accountability can have a partisan taste to it, or at least that is what the battle over the Consumer Financial Protection Bureau (CFPB) has shown.

The CFPB has become arguably the least accountable government agency.

The director can be fired only for “inefficiency, neglect of duty, or malfeasance,” and because the CFPB is an independent agency located within the Fed—which also amazingly has no authority over the agency—and is not subject to the appropriations process, neither the administration nor Congress has a say over the CFPB’s actions.

Last September, a federal appeals court ruled CFPB’s organizational structure unconstitutional and said that its unelected director “enjoys more unilateral authority than any other officer in any of the three branches of government of the U.S. government, other than the president.”

Consumer protection is of the utmost importance, and prior to the creation of the CFPB, the government at both the state and local level had extensive consumer-protection laws and regulations in place and agencies fully tasked with their enforcement. And never in my long community banking career did I see a financial regulator shirk their consumer protection responsibility.

The massive amounts of raw consumer data the CFPB collects, its foray into areas it was specifically prohibited from regulating including auto lending and the practice of law, and the lavish renovation of its leased headquarters—which is costing taxpayers over $200 million—only underscore the need for intensive accountability and transparency.

But as the evolution of Washington has gone, none of that matters; only messaging matters. Defenders of CFPB essentially argue that with an agency named for consumer financial protection, how could it be anything but a good steward of consumer needs and protections? We don’t apply that standard to any other agency in government; having a consumer-friendly name doesn’t absolve it from the necessity of standard congressional oversight.

When you pull back the curtain on this perceived irreproachable agency, you see something much uglier than its name might suggest.

But the worst part about the CFPB is that the agency’s practices are actually harming consumers. By limiting, eliminating, or increasing costs on products that financial institutions can offer, the CFPB’s practices are growing the ranks of unbanked and underbanked Americans. The Dodd-Frank Act and CFPB policies have increased the price of basic banking services and reduced the availability of shortterm credit options for low-income Americans, continuing to push them into more expensive—and potentially unregulated—credit options. To illustrate this, before Dodd Frank, 75 percent of consumers could find “free checking.” By 2015, just 37 percent of banks offer true “free checking.”

CFPB’s “Ability to Repay” and “Qualified Mortgage” rules also have made it more difficult for low- and middle-income borrowers to qualify for a mortgage, with some community banks exiting residential lending altogether due to the complexity and burdens of the rules. The “Know Before You Owe” rule, despite its name, has continued to cause consumer confusion and costly delays in the closing process, not to mention the billions of dollars the real estate industry spends in implementing the rule—resources that could have been extended as credit or directed toward product innovation.

Under the leadership of Chairman Jeb Hensarling, the House Financial Services Committee has proposed the Financial CHOICE Act, which will help increase consumer choice and access to affordable credit and capital for all Americans.

One of the main pillars of the CHOICE Act is to bring accountability back to Washington regulators, including the CFPB. The CHOICE Act will provide structural reforms to the CFPB, including making it subject to appropriations and requiring comprehensive cost-benefit analysis for rule-makings.

By creating checks and balances for CFPB, the CHOICE Act will make it more accountable to Congress and the American people so that it can effectively do the job it was designed to do—protect consumers.