The CFPB Comes Under Fire

Imagine this: Your family is receiving harassing phone calls from a collection agency, demanding that you pay an overdue medical bill which you have already paid. Is there anyone who can help you?

The answer is yes: the Consumer Financial Protection Bureau, a government “watchdog” agency that exists to protect consumers against illegal business practices. But some critics of this agency believe that the CFPB is an unnecessarily part of the government and should be removed. This week let’s take a look at the agency’s history and why some people question its role.

Too Much Power?

The Consumer Financial Protection Bureau came out of the 2010 Dodd-Frank financial law. This legislation was a response to the financial crisis of 2008 and efforts to address the crisis put parts of the federal government in charge (if only temporarily) of the weakened financial industry. The CFPB was proposed by Democratic senator Elizabeth Warren as a way to protect consumers when dealing with financial institutions.

The CFPB is unusual because it is allowed to operate on its own, apart from the White House or Congress. It can enforce existing federal rules, and it can also write new ones. For many critics of the agency, especially many congressional Republicans who are trying to reduce the size of the federal government, this means that the Consumer Financial Protection Bureau has too much power.

Bureau director Richard Cordray is aware of the criticism that the CFPB is getting. Recently, Cordray charged his employees with collecting stories from everyday Americans who had been helped by the bureau, especially in traditionally Republican locations. Cordray then sent the stories to the Trump transition team as proof that the CFPB is helping Americans across party lines.

As all presidents do, President Trump has mostly selected Republican politicians to head cabinet-level and other government agencies. However, Trump has largely left the Consumer Financial Protection Bureau alone. Analysts say that this is because of the agency’s immense popularity with the public. They suggest that even though some congressional Republicans would like to see the bureau dismantled, a great many Americans–both Republicans and Democrats alike–value the protection it offers the everyday consumer.

What’s Next?

Richard Cordray’s term as director of the CFPB ends in July. It may even end sooner, as many experts predict that Cordray may soon enter the Ohio governor’s race. If that happens, the president must replace Cordray. Some financial institution CEOs might be glad for new leadership. But Cordray could view this criticism as proof that the CFPB has done its job well. In the past seven years of its existence, the bureau has refunded nearly $12 billion in refunds and canceled debts to 29 million American consumers.

What Do You Think? Do you think the government has a responsibility to protect its citizens against unfair business and lending practices? Or do you think that the government shouldn’t be allowed to regulate businesses? Explain your point of view.