As we observed in “Financial Crisis and Leviathan,” in its first 14 months the Consumer Financial Protection Bureau, a new federal agency, did little besides expanding an already bloated and wasteful government. The CFPB duplicates the work of existing regulators and worsens a crisis government played a major role in causing through programs such as the Carter-Era Community Reinvestment Act. Unfortunately, the damage does not stop there.
As the New York Times observes, the CFPB has been taking aim at the arbitration process, a longstanding way to resolve disputes outside of the court system. A new rule by the CFPB “which would prevent financial services companies from including class-action bans in consumer contracts, could in effect kill arbitration altogether.” Trouble is, as the Times notes, the CFPB is “empowered to issue rules without legislative approval, making them more difficult to defeat. Furthermore, unlike the Securities and Exchange Commission, which is overseen by a bipartisan commission, the consumer agency has a single head, appointed by the president.”
As Mother Jones explains, a recent television commercial, aired during a presidential debate, “paints the CFPB as a Kremlin-like bureaucratic nightmare,” with prime mover Elizabeth Warren “as the Stalinesque figure” on a red banner alongside CFPB boss Richard Cordray. Given the top-down autocratic structure of the CFPB, and the lack of legislative oversight, the Soviet imagery is not much of a stretch.
The CFPB is institutionalized statist superstition, a dominant non-ethos in Washington. In this superstition, government should always expand wasteful programs and agencies, regardless of performance. And even in times of recession, government should create new federal agencies. As the CFPB confirms, those are easy to start but as Milton Friedman observed, practically impossible to eliminate, regardless of performance.....This Appeared Here.....