CFPB: An Ideological Federal Agency That Must Be Reformed

February 1, 2017 | Consumer Credit Wire

This week’s Consumer Credit Wire is a look at the Consumer Financial Protection Bureau and the way ideology and partisanship guide its operations and decision-making. In a recent National Review piece, former CFPB enforcement attorney Ron Rubin wrote firsthand about the partisan bent that pervades the Bureau. Rubin’s piece and the ideological underpinnings of the Bureau validate the need for reforms, including the re-structuring of the Bureau under the leadership of a bipartisan commission and subjecting the agency to congressional appropriations.

In his piece, Rubin writes how ideology guides the Bureau’s hiring decisions and investigations. According to Rubin, the Bureau employs screening techniques to identify and weed out conservatives and other individuals who have represented clients in the financial services industry.

In one instance, Rubin personally recounts an occasion where a former Clinton-administration lawyer at the Bureau remarked that an applicant under consideration for a job sounded “like a good liberal to me.” It should come as no surprise, then, that 100 percent of political donations from CFPB employees went to Democratic candidates during the 2016 election, according to campaign finance data.

Rubin further writes about the process by which the Bureau decides to investigate consumer issues, claiming that the agency’s Office of Enforcement will disregard consumer protection investigation ideas with no explanation or discussion. Rubin also writes on what he describes as the Bureau’s stonewalling of congressional requests for information. In one anecdote, Rubin quotes a former Democratic Senate staffer who said the unwritten policy of the CFPB’s supervising attorneys was to “never give them [Congress] what they ask for.

Rubin’s account of the Bureau’s operations has been echoed by respected academics. In 2015, Columbia Law School Professor Ronald Mann wrote that the Bureau was motivated to craft its short-term credit rule from its belief that borrowers were unable to responsibly handle their own finances. Mann called the Bureau’s mindset “paternalistic.” In a CFPB study on arbitration, George Mason University Law Professor Todd Zywicki wrote that a Bureau report to Congress on the issue contained substantial methodological flaws and inaccurate data.

As evidenced, Rubin and others posit that the CFPB adheres to an ideological and “paternalistic” agenda when investigating consumer issues and crafting new rules, regardless of facts or empirical data. The current structure of the CFPB, which lacks the checks and balances to which numerous federal departments and agencies are subjected, is in need of reform primarily through the oversight of a bipartisan commission and subjecting the Bureau to congressional appropriations.