A recent article in Politico blamed Democrats for the ongoing Republican campaign to weaken the Consumer Financial Protection Bureau (CFPB), misleadingly alleging that “Democrats are facing the consequences of their decision to protect the agency’s powerful independent director,” without disclosing the conflicts of interest of the experts it cited in support of such a view.
Such a commission structure at CFPB has long been a goal of financial industry lobbyists and some Republicans seeking to roll back consumer protections put in place by the Dodd-Frank Act, because it would make the agency less responsive to predatory practices targeting Americans, delaying its decision-making and ability to protect consumers.
In the November 27 article, Politico's financial services reporter claimed the succession crisis at the CFPB created by the recent resignation of long-time Director Richard Cordray “highlights how Democrats” are responsible for “the turmoil” because they rebuked GOP overtures that would have weakened the agency at its inception. From the article:
But while the process plays out in court, the turmoil highlights how Democrats shunned Republican efforts to broaden the governance of the fledgling agency from a single appointed director to a bipartisan commission that would have included members with diverse political viewpoints.
In truth, the bureau has been mired in controversy since its creation. Warren has built a political career railing against Wall Street. Cordray infuriated industry and inspired lawsuits. And the bureau itself is unique, investing great power in one person with almost no accountability.
It was predictable that such a toxic mix would eventually explode. Now Democrats are facing the consequences of their decision to protect the agency’s powerful independent director. Anybody Trump nominates to replace Cordray will have the ability to undo a lot of his work. On Monday, Mulvaney wasted no time, imposing a regulatory and hiring freeze.
This analysis mirrors misleading arguments made by the conservative Washington Examiner and the right-wing blog RedState, which both seemed to revel in the supposed reckoning Democrats brought on themselves. In the midst of these ongoing media attacks, the Republican-controlled Congress has already moved to weaken the CFPB, a fact never mentioned in the Politico piece.
The Politico article also echoes financial industry talking points in favor of implementing a commission structure at CFPB, going so far as to rely on a quote from Richard Hunt, the president of the Consumer Bankers Association, without pointing out he has spent years demanding the agency be turned into a weaker bipartisan commission. Indeed, more than a dozen financial and real estate lobbying arms, including the Consumer Bankers Association, wrote to Congress in June asking that the Republican-controlled House and Senate move to reshape the CFPB’s governance structure.
But the very reason the CFPB avoided a similar commission when the agency was created was because in the aftermath of the financial devastation of the Great Recession (unleashed in part by underregulated financial industry actors), the decision was made to avoid a weakened commission that would be susceptible to just this sort of political pressure, or the type of partisan paralysis that has afflicted similar bipartisan efforts.
Making matters worse, the only Democrat featured prominently in the article has voiced opposition to CFPB consumer protections in the past, and works at a law firm that proudly boasts of its experience fighting the agency on behalf of “bank and non-bank consumer financial services providers.” Politico’s failure to disclose this clear conflict of interest is the kind of oversight one might expect from Fox News.
This is not the first time Politico has targeted the CFPB. A piece attacked the consumer advocacy agency in November 2015 after it used research from a consumer advocacy group while drafting new rules aimed at ending racial biases in auto lending. The 2015 criticism followed a salvo from the right-wing editorial board of The Wall Street Journal, which slammed the CFPB for daring to stand up against racially biased lending practices.
Conservative politicians and media outlets have routinely pilloried the CFPB since its inception, sometimes inventing reasons to smear the agency. Some antagonists have even attacked the CFPB for paying its employees competitive salaries, falsely claiming along the way that the agency is misusing tax dollars (it’s actually funded by the Federal Reserve).