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Tags: cfpb | court | congress | constitution

Court Reins in CFPB and Careless Congress

Court Reins in CFPB and Careless Congress

Sen. Elizabeth Warren (D-MA) waits for the beginning of a hearing before the Senate Banking, Housing and Urban Affairs Committee April 7, 2016, on Capitol Hill in Washington, DC. The committee held a hearing on 'The Consumer Financial Protection Bureau's Semi-Annual Report to Congress.' (Alex Wong/Getty Images)

George Will By Sunday, 16 October 2016 02:58 AM Current | Bio | Archive

Another small step was taken last week on the steep and winding ascent back to constitutional norms. The U.S. Court of Appeals for the D.C. Circuit, the nation's second-most important court, did its judicial duty by reprimanding Congress for abandoning constitutional propriety.

The court declared unconstitutional the unprecedented independence that Congress conferred on the Consumer Financial Protection Bureau. This legal skirmish about one aspect of this one tentacle of the administrative state may seem recondite and trivial. It concerns, however, two momentous matters. One is the integrity of the federal government's Madisonian architecture. The other is something that not even the prescient James Madison could have anticipated — Congress' modern eagerness to diminish itself.

The CFPB is empowered to "regulate the offering and provision of consumer financial products or services." Being able to define financial products, it can regulate almost everything touching finance, from mortgages to financial advisers to retirement plans — even car loans, although expressly forbidden to do so. Acting like a freewheeling little legislature, it concocts laws as it improvises standards. It is authorized to "declare," with scant congressional guidance, certain business practices "abusive," "unfair," "deceptive" or involving "discrimination." It does so by whatever criteria it pleases, and imposes penalties it deems appropriate.

Until the court's decision last week, the CFPB, unlike any federal institution created since 1789, was uniquely sovereign: Its director was appointed by the president for a five-year term — longer than the president's — and the director could be removed by the president only "for cause." That is, only for "inefficiency, neglect of duty or malfeasance," not for reasons of policy.

The court held that the CFPB is "unconstitutionally structured" because of its "novel agency structure." There are several agencies that are controlled by bipartisan commissioners who can only be removed for cause, and they are described as "independent" agencies as a result. But they all have five members, chosen from both parties. The court has just held, however, that as created by Congress in the 2010 slapdash Dodd-Frank legislation, the CFPB's single director "enjoys more unilateral authority than any other officer in any of the three branches of the U.S. government, other than the president."

The court's ruling makes the director subject to presidential control through dismissal. Another important challenge to the CFPB's operations, currently in a federal district court, concerns Congress' voluntary abandonment of its power of the purse: Dodd-Frank, which was passed with the support of only three House Republicans and three Republican senators, says the CFPB's funding shall be "determined by the director" and shall come not from congressional appropriations but from the Federal Reserve. Small wonder it spends lavishly on itself. Sen. Elizabeth Warren, D-Mass., who while at Harvard Law School proposed the CFPB, insists it is "highly accountable" to Congress. The CFPB disagrees, having proclaimed that its funding from outside the appropriations process gives it "full independence" from Congress. When a member of the House Financial Services Committee asked CFPB Director Richard Cordray about his agency spending $215 million refurbishing a building with an assessed valuation of $150 million, he, oozing disdain, dismissed the question: "Why does that matter to you?" Perhaps he should be forgiven for assuming that CFPB spending government money is none of Congress' business, given that Congress has effectively said exactly that.

Although Madison assumed that the government's rival institutions would jealously defend their powers, he worried that the legislative branch would threaten the equilibrium of the checks and balances by "drawing all power into its impetuous vortex." Today, however, Congress is centrifugal rather than centripetal, expelling rather than concentrating power.

A peculiarity of today's politics is the disproportion between Democrats' fervent desires to serve in Congress and their lackadaisical willingness to cede its powers. Democratic candidates, both incumbents and challengers, are fighting ferociously to remain on, or get to, Capitol Hill. One wonders: Why?

Their party is doctrinally devoted to marginalizing the legislative branch in order to expand the discretion of the administrative state as an instrument of executive power.

And the next president certainly will be impatient with Madison's separation of powers. President Hillary Clinton will be because progressives since Woodrow Wilson have considered this system an anachronistic impediment to energetic government powered by an unconstrained executive. President Donald Trump will be anti-Madisonian because the system of checks and balances will impede the sweep of his unmediated fabulousness.

The CFPB's progressive authoritarianism reflects, in the language of the Hudson Institute's Christopher DeMuth, "regulatory insouciance" made possible by "legislative abnegation." Both will continue until conservatism reappears.

George F. Will is one of today's most recognized writers, with more than 450 newspapers, a Newsweek column, and his appearances as a political commentator on Fox news. Read more reports from George Will — Click Here Now.

© Washington Post Writers Group.


GeorgeWill
The court declared unconstitutional the unprecedented independence that Congress conferred on the Consumer Financial Protection Bureau. This legal skirmish about one aspect of this one tentacle of the administrative state may seem recondite and trivial. It concerns, however, two momentous matters.
cfpb, court, congress, constitution
788
2016-58-16
Sunday, 16 October 2016 02:58 AM
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