In a blow to Elizabeth “Pocahontas” Warren’s ego, the Supreme Court decided 5-4 to rein in the power of the Consumer Financial Protection Bureau (CFPB). The agency reflected Warren’s anti-business DNA and, in 2010, became the centerpiece of the Dodd-Frank Wall Street Reform And Consumer Protection Act. In fairness, the court found the CFPB itself constitutional, but ruled un-elected bureaucrats are accountable to elected leaders.
Only a big-government socialist thinks a new agency with a dictator in charge – reporting to no one – is a good idea. The voice of conservative common sense, Clarence Thomas, opined the CFPB itself is unconstitutional: “numerous, unaccountable independent agencies [now] exercise vast executive power outside the bounds of our constitutional structure.” Translation: businesses have enough competition without their own government erecting more barriers and constraints.
Ms. Warren’s anti-bank views are typical of liberals who’ve never owned or managed a business. Because the extent of their economic experience is limited to consumption, they believe individual borrowers are David and bankers are Goliath. The CFPB’s hated enemies are credit-card, mortgage, and tuition lenders, as well as pay-day loan providers. After the court’s ruling, Democrats defended the agency by crowing $12 billion had been awarded to “victimized” consumers. This needs some perspective.
In 2019, consumers owed banks $14.3 trillion, of which $444 billion was considered “seriously delinquent” (source: New York Federal Reserve). The collection industry reports a collection rate of 20% – meaning lenders will write off $355 billion in the near future. The CFPB finds consumer damages of $1.2 billion annually; hence, the agency is the regulatory equivalent of a mall cop. $1.2 billion is symbolic: peanuts compared to $355 billion the banks forgive.
Justice Thomas hit the heart of the issue: why have the CFPB at all? The US banking industry is efficient and among the world’s most regulated. In addition to the CFPB, five other federal agencies regulate America’s banks: CFTC, FDIC, FRB, OCC, and SEC. Further, the largest US banks are almost always engaged with the DOJ and FBI, thanks to whistle-blowers and their for-profit (33%) lawyers.
If Warren had truly wanted to help consumers in 2009, the CFPB would have kept low-income families in their homes. By not preventing black home foreclosures, black home values fell 51% from 2006 to 2015 (in comparison, Asian home values fell only 6%); thereby wiping out 100% of black wealth created in the go-go Bush years (source: St. Louis Federal Reserve). For this reason, Kanye West says Obama betrayed black Americans.
The CFPB exemplifies the vapid policies for which Black Exit (BLEXIT) resents Democrats. After the White House signing ceremony and re-assuring words, Democrats hung in the Rose Garden saying “far out” to each other. Then, big brother went to work: heaping legal fees and fines onto lenders – and who paid? Consumers, through higher interest rates and loan denials. Far out, Liz – like in left field!