Next Up for the Broccoli Brigades: The Consumer Financial Protection Bureau

Michael Stephens | June 25, 2012

Brad Plumer reports that a Texas-based bank and a pair of conservative advocacy groups have filed suit against the Consumer Financial Protection Bureau, claiming that the agency is unconstitutional (the agency was created by the Dodd-Frank Act and was a longtime cause of senatorial candidate Elizabeth Warren, who had a hand in setting it up).

Normally, this is the sort of story that wouldn’t merit a pause.  But given the fact that we’re now patiently waiting for the Supreme Court to rule on the constitutionality of the Affordable Care Act (“Obamacare”), with many expecting that the Court will strike down some portion of the law—a scenario very few people took seriously when the law passed—anyone interested in financial regulatory reform should probably start paying attention to this lawsuit.  (Plumer has posted a copy of the suit, which also targets FSOC, the Financial Stability Oversight Council.)

Despite the numerous flaws in the regulatory approach taken by Dodd-Frank, many of which have been highlighted by Levy Institute scholars (see, for instance, here, here, and here), Randall Wray and Yeva Nersisyan argued (in a paper written when the law was being put together) that the idea of the CFPB was “the best part of the proposal put forward by Washington.”

According to a CFPB spokesperson cited by Plumer, “this lawsuit appears to dredge up old arguments that have already been discredited.”  Stand ready for those old arguments to be given new life.  And be on the lookout for some shiny new arguments, likely of the slippery slope variety; preferably involving a cruciferous vegetable.

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2 Responses to “Next Up for the Broccoli Brigades: The Consumer Financial Protection Bureau”

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  1. Comment by Michael E PicrayJune 26, 2012 at 11:53 am   Reply

    Since Czar Warren and her underlings are still putting the beast together, I cannot comment on the thing itself. I should say that I expect yet another meddling obstructionist Federal Agency that will never die.

    But I CAN comment on the way that Obama and the FED violated the HELL out of the US constitution to make her the defacto “director” and to be given the job of setting the organization up and hiring it’s core employees.

    It was/is surmised that Warren would probably not have been passed-on/approved by the Senate for the director’s position – and since the Senate is controlled by the Dems, that might be an indicator of just how FAR from mainstream she is, and the enabling legislation for the CFPB specifically required that they do so.

    But Obummer wanted what he wanted and so he took the illegal and completely unconstitutional route to get what he wanted. He appointed her as a “special assistant” to treasury secretary TcT (Tax cheat Timmy) even though she didn’t report to him. (She reported ONLY to Obama.) Then Obama set up a deal with the FED to DIRECTLY FUND HER (by-passing congress AND the Treasury) to the tune of, I believe it was $75 Million to cover her expenses.

    An organization conceived in illegal acts, and created by a conspirator to those acts cannot be anything that will benefit the US or its citizens.

    • Comment by Michael StephensJune 26, 2012 at 1:34 pm   Reply

      A few factual notes. First, the CFPB is already up and running. It has an acting director, in the person of Richard Cordray. Cordray was a recess appointment.
      Second, the Democrats do not “control the Senate.” They control a majority of votes in the Senate—but that’s not sufficient to pass legislation or make appointments. Sixty votes are required to break a filibuster, and the body has now developed to the point where everything must surmount a filibuster threat (i.e. there is a de facto 60 vote requirement for everything). The Democrats controlled 60 votes in the Senate for roughly three months, until Scott Brown was elected in MA. They cannot therefore pass legislation (unless budget reconciliation rules are used) or approve appointments in the regular order unless Republicans acquiesce. Senate Republicans refused to allow a vote on Cordray’s appointment—and, it should be noted, their objections had nothing to do with Cordray himself. Republicans in the Senate (44 of them) insisted that they would block anyone for the post; that no director would be appointed until their demands were met for changing the CFPB.

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