Back in 2023, Brian Johnson testified before the House Financial Services Committee’s Subcommittee on Financial Institutions and Monetary Policy during a hearing on the CFPB. The testimony offers clues as to what Johnson thinks. It includes a long list of items where Johnson seems to think the Bureau had gone astray. I picked out four below, but you can read the entire list at the link. Johnson wrote (footnotes omitted) that the Bureau [my comments appear in brackets]:
- “has asserted that the Equal Credit Opportunity Act (ECOA) applies to non-applicants for credit;” [The Seventh Circuit later upheld this decision after Loper Bright, saying the court engaged in de novo review. Consumer Fin. Prot. Bureau v. Townstone Fin., Inc., 107 F.4th 768 (7th Cir. 2024). Interestingly, Johnson served under CFPB Director Kathy Kraninger who filed the Townstone case, though I believe Johnson had left the Bureau before the agency did so.]
- “claims that its “unfairness” power permits it to fill gaps between statutes to address alleged discriminatory conduct outside of the offering or extension of credit, which may run contrary to recent Supreme Court jurisprudence” [my article explaining why the CFPB has this power is at Is Discrimination Unfair? by Jeff Sovern :: SSRN]
- “issued Circulars, which interpret laws in substance but are labeled as statements of policy for purposes of judicial review” [policy statement routinely interpret laws; consider, for example, the FTC’s 1983 Policy Statement on Deception, under which the FTC still operates]
- “announced an initiative to reduce product and service fees that it labels “junk fees” without citing any violation of law or proposing any rulemaking to address the Bureau’s concerns . . . .” [it seems fairly clear that the Bureau did so under its UDAAP powers]
Here’s another quote from Johnson’s testimoney:
Properly structured and managed, [the CFPB] is capable of great good. It has the potential to support free markets and promote consumer choice and economic opportunity for the benefit of all customers of regulated financial institutions in this country. Notwithstanding the admirable work performed by many of the CFPB’s career staff, the Bureau has not yet reached this potential . . . . By what yardstick shall we measure it?
* * *
The key measure in my view is the extent to which the CFPB has adhered to the rule of law. We can differ in good faith about the ends of CFPB policy, but we must have confidence that the agency’s powers, authority, and duties are executed strictly within constitutional and statutory bounds. Hopefully we can agree that any agency that exceeds its authority or ignores its statutory obligations undermines the rule of law, and hence its own legitimacy.
I wonder how Johnson feels about President Trump’s proposal to cap credit card interest rates at ten percent. Or Trump’s practice of having the government take ownership interests in private companies. Or the many laws that Congress has enacted that regulate financial institutions in ways that arguably interfere with the free market, like the Fair Credit Billing Act, the Electronic Fund Transfer Act, or even the CFPB’s power to proscribe unfair or abusive practices.
