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Ronald Reagan correctly stated that the nine most terrifying words in the English language are “I’m from the government and I’m here to help.”

The very last thing we need is a new government agency micromanaging the financial decisions of banks, businesses and individuals. We already have seven powerful entities tasked with the oversight of the banking, lending and investment industries.

We have the Federal Reserve. We have the Comptroller of the Currency. We have the Federal Deposit Insurance Corporation. We have the Securities and Exchange Commission. We have the Commodities Futures Trading Commission. We have the National Credit Union Administration and the Federal Housing Finance Agency. They have done such a wonderful job. Just look at the mess we’re in!

Now, the Obama administration and the Democrats have given us a new, onerous, unaccountable regulatory agency with virtually unlimited power to control all of our money that isn’t hidden under a rock somewhere. It’s called the Consumer Financial Protection Bureau. If you are the least bit familiar with Washington, the name alone is enough to leave you shaking in your boots.

The CFPB was created in much the same way as Obamacare. The Dems rammed it through in 2010, when they had a lock on both houses of Congress.

The CEPB was hatched by the Dodd-Frank Act, which is supposed to protect us from ourselves and prevent the kind of problems that led to the housing bubble, which caused the largest financial collapse since the Great Depression. Ironically, it was named for two of the elected representatives who blocked the very reforms that would have prevented the crises in the first place – the same two individuals who were at the epicenter of the housing crisis and who profited from the lending industry.

With these two foxes in the chicken coop, who can be surprised that their cure is worse than any financial disease we might imagine?

Although the CFPB officially opened its doors in July, it is prevented by law from imposing its onerous new regulations until a director is confirmed by the Senate. In an effort to force Democrats to enact much needed reforms that would make the bureau somewhat accountable to the American people, the Republican minority has been blocking the confirmation of Ohio Attorney General Richard Cordray, Obama’s choice to run the CFPB.

With the holidays upon us, the public is not paying attention, and Obama is content to run out the clock. When Congress goes home, he has indicated that he will make a recess appointment. At that point, there will be no turning back.

Once Cordray is placed in office, this one man will have the unbridled power to regulate consumer financial products and services previously regulated by the seven regulatory authorities listed above. There is virtually no check on his power as with the other regulatory bodies controlled by boards or that have budgets controlled by Congress.

As created, the CFPB is an independent bureau within the Federal Reserve System. Its status within the Fed effectively shields it from presidential oversight, but the Fed is statutorily prohibited from “intervening” in the affairs of the CFPB. Furthermore, the CFPB can demand up to 10 percent of the Fed’s budget, or about $600 million a year to do with as it pleases.

 

Technically, the CFPB can be overruled by the Financial Stability Oversight Council (another creation of Dodd-Frank) if its action would endanger the “safety and soundness of the United States banking system or the financial system of the United States.” A tall order to be sure and made even taller with the requirement that any veto of the bureau’s action must be approved by two-thirds of the council’s 10-member board. Fat chance!

Interestingly, Fannie Mae and Freddie Mac, two major contributors to the housing meltdown and large contributors to Dodd’s and Frank’s re-election campaigns, are explicitly exempt from CFPB oversight.

Can Obama be persuaded to forgo this recess appointment until needed reforms can be made to insure that the CFPB does not end up hurting consumers and the economy by limiting our choice in financial products and services and by driving small businesses out of the marketplace? Unlikely!

If you like the Federal Reserve System, you will love the new CFPB!

Every year, the Federal Reserve returns the excess funds from its earnings to the Treasury. Under Dodd-Frank the CFPB is funded out of that excess. Even without a director, the CFPB already has requested $329 million.

This Christmas, the CFPB will be an expensive gift from the Democrats and the Obama administration to the American people that just keeps on giving. Enjoy!

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