Todd Zywicki: Cordray’s CFPB “Pummeled” Consumers

by Jeff Sovern

George Mason's Todd Zywicki has an op-ed in the WSJ, The CFPB Could Be a Force for Good, in which he lays out his vision for what the CFPB should do and attacks what it did under Cordray. Zywicki is the only academic whose name has been bruited about as a potential Trump appointee to be the next director. It's hard to know what this essay signifies as to Zywicki's prospects to lead the CFPB: it could be an attempt to drum up support for Zywicki's candidacy, or conversely, as candidates for such positions are often urged to lie low until after confirmation, it could mean that Zwyicki has concluded he will not be the director and is offering suggestions for what the next director and the interim director should do. While the op-ed makes many claims, it does not link to any sources to substantiate them. Here is an excerpt:

During Richard Cordray’s tenure as director of the Consumer Financial Protection Bureau, the CFPB pummeled American consumers and the economy while doing little to promote financial stability. The pain was especially acute for low- and middle-income consumers who lost access to credit cards, faced higher bank fees and reduced access to free checking, and found it harder and costlier to obtain mortgages, especially as first-time homebuyers. * * *

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American families know better than bureaucrats what financial products best meet their needs. One justification for the CFPB’s broad scope of authority was to enable it to oversee the entire consumer-credit ecosystem and break down the traditional regulatory silos that focus on who issues financial products instead of how consumers use them. The CFPB should concentrate its efforts on empowering families instead of banning products or using trendy behavioral-economics theories to “nudge consumers toward decisions central planners favor. * * * 

Mr. Cordray’s CFPB viewed consumers as too dumb, irrational or vulnerable to make their own decisions about whether to enter into a contract with an arbitration clause, take out a payday loan, or bargain with a car dealer over an auto loan. * * * 


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