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.....
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