Mak­ing friends with the CFPB

The Progress-Index - - OPINION -

It seems ev­ery day a new bu­reau or de­part­ment is be­ing cre­ated in Wash­ing­ton to ad­dress some ob­scure is­sue or prob­lem fac­ing Amer­i­cans. For bu­reau­crats, it doesn’t mat­ter if other reg­u­la­tory bod­ies were al­ready tasked, with the same over­sight be­cause the at­ti­tude is “for­get the money it costs to start and fund such an agency — let’s ex­pand the bu­reau­cracy ev­ery chance we get.”

And, that’s ex­actly what hap­pened in 2011 when El­iz­a­beth War­ren and her like-minded friends cre­ated the “in­de­pen­dent” Con­sumer Fi­nan­cial Pro­tec­tion Bu­reau (CFPB) to “pro­tect” con­sumers from an­other fi­nan­cial cri­sis. In­stead of go­ing af­ter the big banks on Wall Street who had cre­ated the re­ces­sion of 2008, the CFPB tar­geted Main Street, hurt­ing busi­nesses and sig­nif­i­cantly lim­it­ing con­sumer choice of fi­nan­cial prod­ucts. With con­sumer pro­tec­tion far from their pri­or­ity, the CFPB pur­sued a par­ti­san agenda from start to fin­ish un­der for­mer di­rec­tor Richard Cor­dray.

Be­tween a $43 mil­lion con­tract with a lib­eral ad­ver­tis­ing agency, a new lux­ury head­quar­ters that’s ren­o­va­tion to­taled around $216 mil­lion ($161 mil­lion over the ini­tial bud­get slated for ren­o­va­tion) and other un­nec­es­sary ex­penses, the CFPB did lit­tle to pro­tect con­sumers. In­stead, it pur­sued a par­ti­san agenda and sent the bill to the Amer­i­can tax­payer, all while en­joy­ing $90,000 bike racks and a two-story wa­ter­fall with a sunken gar­den.

Even worse than the bla­tant waste of tax­payer funds, the bu­reau pur­sued il­log­i­cal rules that lacked any rea­son­able ac­count­ing of costs and ben­e­fits. Case in point: the ar­bi­tra­tion rule. Fi­nal­ized in the sum­mer of 2017, the reg­u­la­tion banned banks and other large fi­nan­cial in­sti­tu­tions from mak­ing cus­tomers sign manda­tory ar­bi­tra­tion agree­ments with class-ac­tion waivers.

De­spite claims that the rule was a nec­es­sary safe­guard against cor­po­rate ex­cess, firms un­der­go­ing ar­bi­tra­tion typ­i­cally save 60 per­cent to 70 per­cent in le­gal fees and dis­cov­ery costs com­pared to go­ing through (back­logged) state and fed­eral courts. Wronged cus­tomers and em­ploy­ees needn’t keep lawyers on re­tainer in ar­bi­tra­tion cases, since dis­putes are re­solved far more quickly. De­spite Cor­dray and Co. not see­ing the light, the Trump ad­min­is­tra­tion stepped up and killed the rule in Novem­ber 2017.

In the end, Cor­dray showed his true col­ors and left the CFPB to run for gov­er­nor of Ohio, a pur­suit that has left Trump the op­por­tu­nity to re­place CFPB lead­er­ship and get the bu­reau back on track. Act­ing Di­rec­tor Mick Mul­vaney has done an ex­cel­lent job of cut­ting spend­ing and stop­ping the CFPB’s par­ti­san agenda, but now it’s time for a longterm so­lu­tion.

Kathy Kraninger is the per­fect per­son to lead the agency. Kraninger is a ded­i­cated pub­lic ser­vant who knows how to man­age a bud­get and put the tax­payer first. For more than two decades, she has served in im­por­tant po­si­tions in the de­part­ments of Trans­porta­tion and Home­land Se­cu­rity as well as the House and Se­nate Ap­pro­pri­a­tions Com­mit­tees.

In her cur­rent role at the Of­fice of Man­age­ment and Bud­get, Kraninger over­sees the bud­get and pol­icy man­age­ment of seven Cab­i­net de­part­ments and more than two dozen fed­eral agen­cies and bu­reaus — in­clud­ing ev­ery fed­eral of­fice that’s re­spon­si­ble for con­sumer fi­nance. All to­taled, she over­sees more than $250 bil­lion in fed­eral tax dol­lars and she knows the im­por­tance of spend­ing those dol­lars re­spon­si­bly and ef­fec­tively.

Kraninger is just the leader the CFPB needs to get the agency back on track for good. Kraninger will clean up the mess left be­hind by her pre­de­ces­sor and get back to the busi­ness of pro­tect­ing con­sumers while also en­sur­ing that Amer­i­can busi­nesses are pro­tected. The Se­nate should work to con­firm this friend of the Amer­i­can tax­payer as soon as pos­si­ble.

David Wil­liams, Tax­pay­ers Pro­tec­tion Al­liance

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