Chris Peterson’s Important Defense of the CFPB

It's titled Will Congress Remove Consumer Credit “Seat Belts”? and is in Democracy. The whole piece is worth reading if you care about the CFPB, but here's an excerpt to whet your appetite:

[I]f the CFPB really were a “runaway agency,” we should expect to see banks running from it. In every law enforcement case, the defendant is entitled to due process of law. Banks get to have to their day in court. So, how often have banks raced to the judicial branch to protect them from this Frankenstein monster? Dozens of times? A handful of cases? The answer is not even once. In order to be subject to CFPB enforcement, by statute, banks must have over $50 billion in capital. Although this kind of money buys access to the finest lawyers, in every CFPB enforcement case, banks signed a settlement agreement. This is not to say banks were always happy with the outcome. But neither are people that get speeding tickets. When money is on the line, the facts show that our most sophisticated and well-capitalized financial institutions did not want a judge or a jury—or the media attention that go along with them—to look at their case.

The truth is that the CFPB has faced criticism not because it is out of control, but because it is effective. If the CFPB were bringing crazy cases, hundreds of federal judges appointed by Republican and Democratic presidents would simply dismiss the agency’s complaints. And some of those judges would enjoy doing so. Too many of America’s financiers are betting it will be easier to strangle the watchdog than actually follow the rules or pay up when they make a mistake. And worse, too many politicians, pundits, and astroturf-think-tanks-for-the-wealthy want to score political points by taking down what may be the best recent example of a government actually doing really great work for the public. If cooler heads prevail, then we can hope in the coming years the CFPB’s no-nonsense approach to consumer protection will be as universally accepted as seat belts are today.


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