November 19, 2012

George Will: Consumer Financial Protection Bureau needs to have day in court

The bureau seemingly answers to nobody, and its mission makes a mockery of the U.S. Constitution.

There can be unseemly exposure of the mind as well as of the body, as the progressive mind is exposed in the Consumer Financial Protection Bureau, a creature of the labyrinthine Dodd-Frank legislation. Judicial dismantling of the bureau would affirm the rule of law and Congress' constitutional role.

The bureau nullifies Congress' use of the power of the purse to control bureaucracies because its funding -- "determined by the director" -- comes not from congressional appropriations but from the Federal Reserve. Untethered from all three branches of government, unlike anything created since 1789, the bureau is uniquely sovereign: The president appoints the director for a five-year term -- he can stay indefinitely, if no successor is confirmed -- and the director can be removed, but not for policy reasons.

The bureau's 2012 budget estimated $130 million for -- this is the full explanation -- "other services." So it has been hiring promiscuously and paying its hires lavishly: As of three months ago, about 60 percent of its then-958 employees were making more than $100,000 a year. Five percent were making $200,000 or more. (A Cabinet secretary makes $199,700.)

The bureau's mission is to prevent practices it is empowered to "declare" are "unfair, deceptive, or abusive." Law is supposed to give people due notice of what is proscribed or prescribed, and developed law does so concerning "unfair" and "deceptive" practices. Not so, "abusive."

An "abusive" practice may not be unfair or deceptive yet nonetheless may be illegal. It is illegal, the law says, if it "interferes with" a consumer's ability to "understand" a financial product, or takes "unreasonable" advantage of a consumer's lack of understanding, or exploits "the inability of the consumer to protect" his or her interests regarding a financial product. This fog of indeterminate liabilities is causing some banks to exit the consumer mortgage business.

C. Boyden Gray and Adam White, lawyers representing a community bank challenging the constitutionality of the bureau's "formation and operation," note in The Weekly Standard: "By writing new law through case-by-case enforcement, and by asserting 'exception authority' to effectively rewrite statutes, the CFPB is substantially increasing bankers' compliance costs. The absence of clear, simple, up-front rules will force banks to hire ever more lawyers and regulatory compliance officers to keep up with changing laws -- an outcome that inherently favors big banks over smaller ones."

Even worse, say Gray and White (in their complaint for the community bank), Dodd-Frank "delegates effectively unbounded power to the CFPB, and couples that power with provisions insulating CFPB against meaningful checks" by the other branches of government. This nullifies the checks and balances of the system of separation of powers.

Courts are reluctant to restrict Congress' power to delegate quasi-legislative powers, but the CFPB is an especially gross violation of the Constitution's Article I, Section 1: "All legislative powers herein granted shall be vested" in Congress. By creating a bureau that floats above the Constitution's design of government, Congress injured all Americans.

Like the Independent Payment Advisory Board, Obamacare's care rationing panel, the bureau embodies progressivism's authoritarianism -- removing much policymaking from elected representatives and entrusting it to unaccountable "experts."

Similarly, when Obama allows states to waive work requirements that the 1996 welfare reform law explicitly made non-waivable, he evades the Constitution's provision conferring a conditional presidential veto power -- ignoring the law becomes preferable to a veto Congress can override. And the waivers make a mockery of the Constitution enjoining the president to "take care that the laws be faithfully executed."

Philander Knox should be the Obama administration's patron saint. When Theodore Roosevelt asked Attorney General Knox to concoct a defense for American behavior in acquiring the Panama Canal Zone, Knox replied: "Oh, Mr. President, do not let so great an achievement suffer from any taint of legality."

George Will is a columnist for The Washington Post. He can be contacted at:

georgewill@washpost.com

 

Were you interviewed for this story? If so, please fill out our accuracy form

Send question/comment to the editors




Further Discussion

Here at PressHerald.com we value our readers and are committed to growing our community by encouraging you to add to the discussion. To ensure conscientious dialogue we have implemented a strict no-bullying policy. To participate, you must follow our Terms of Use.

Questions about the article? Add them below and we’ll try to answer them or do a follow-up post as soon as we can. Technical problems? Email them to us with an exact description of the problem. Make sure to include:
  • Type of computer or mobile device your are using
  • Exact operating system and browser you are viewing the site on (TIP: You can easily determine your operating system here.)