Robert Hurt: Reining in the CFPB’s unchecked authority

robert hurtThe Consumer Financial Protection Bureau was created by the Dodd-Frank Act with the intention of overseeing consumer protection in the financial sector, taking over those responsibilities from various other federal agencies.  It was equipped, however, with unprecedented authority and an entirely unaccountable governance structure that defies the basic principle of separation of powers.  The agency has been allowed to run roughshod over the financial sector without much consideration for consumers or the rule of law, which has severe consequences for our economy.

This past Tuesday, a federal appeals court made a ruling deeming the CFPB’s foundational structure unconstitutional citing its immense share of unchecked authority.  The CFPB receives its funding directly from the Federal Reserve, which is not held to a minimal standard of transparency or accountability, and is subjected to very limited congressional oversight – a semi-annual Financial Services Committee hearing with its Director.  This was a welcome decision after multiple efforts by House a Republicans to inject greater accountability to the agency.

Five years since its implementation, the CFPB remains an opaque and dangerously unaccountable agency equipped with unrivaled power over America’s financial system and consumers’ personal data.  In actuality, it is using its power to adopt policies that often harm, rather than help, the very Americans it is tasked with protecting – namely consumers, community banks, and credit unions.  I have repeatedly heard from citizens across Virginia’s Fifth District telling me of the struggles induced by the CFPB indicating that the agency’s unchecked authority is restricting consumer choice, creating an atmosphere of economic uncertainty, and imposing undue regulatory burdens that increase costs.

One particularly telling data point is the dramatic slowdown in the rate that new banks are starting up.  Prior to the financial crisis, roughly 100 new banks were established each year across the country, but since the passage of Dodd-Frank, that rate has dropped to about one bank per year.  Bank consolidation has also accelerated dramatically as big banks have a greater capacity to absorb regulatory costs than do small ones.  While many factors go into these trends, the CFPB’s heavy-handed regulatory regime is certainly one of them.  At a time when consumers need more choices, not fewer, and small businesses need more options for accessing capital to create jobs, our regulatory agencies must work in a way that facilitates competition rather than stifle it.

Without appropriate oversight from Congress, the CFPB will be able to continue imposing sweeping and restrictive regulations on community financial institutions across the Fifth District at a time when access to credit for small businesses, farms, and families is more essential than ever.  Real consumer protection requires that we shift power from bureaucrats in Washington who implement one size fits all regulations to those who are most affected.  True consumer protection empowers consumers, and bankers, not the bureaucrats in Washington.

Though this recent decision by the U.S. Court of Appeals for the District of Columbia directing the CFPB to restructure its operations within the executive branch to diminish its unchecked authority is a step in the right direction, appropriate consumer protections are best achieved through legislative reforms, not by empowering one unaccountable individual with such a crucial task.  I look forward to continuing to work with my colleagues to advancing commonsense policies that will enhance accountability and transparency at the CFPB to ensure their actions do not come at the expense of Fifth District families and small businesses.

If you need any additional information or if we may be of assistance to you, please visit my website at or call my Washington office: (202) 225-4711, Charlottesville office: (434) 973-9631, Danville office: (434) 791-2596, or Farmville office: (434) 395-0120.

Robert Hurt represents the Fifth District in Congress.

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