When disaster strikes in this country, someone usually grabs the microphone to pronounce that Washington will step in with new programs to ensure “it” will never happen again.  Such was the case five years ago this month with the passage of the Dodd-Frank Act, the voluminous legislation intended to supposedly ensure that there would never be a repeat of the 2008 financial crisis that gripped America. 

It was supposed to protect the consumer from the fraudulent or unscrupulous business practices of financial institutions.  It’s hard to argue with that. Financial institutions, credit companies, and other industries dependent on financial services have had to make drastic changes to their operations since the passage of the bill. 

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However, Dodd-Frank has ended up contributing to an unprecedented interference in the free market and reductions in personal privacy and consumer freedom - more than any other single piece of legislation. 

The law’s most significant achievement – the creation of the Consumer Financial Protection Bureau (CFPB) – has become the poster child for nanny state government, domestic spying and a lack of transparency and accountability that’s nothing to celebrate.

Most Americans don’t know about the existence of the CFPB, but Dodd-Frank’s out of control law enforcement agency is turning out to be perhaps the most powerful agency nobody has ever heard of.  According to a USCC-Zogby Analytics poll in June, 2015, less than one in five Americans know the CFPB exists. From all indications, the CFPB would like to keep it that way. 

Here’s why.  Section 1021(c)1 of Dodd-Frank lists the primary function of the Bureau as, first and foremost, to educate the public about financial services products so they can make better informed decisions.  Instead, the CFPB quickly set out to develop overbearing regulations for the financial services industry, even though other agencies already regulate the same companies over which the CFPB now asserts jurisdiction. 

The difference?  Dodd-Frank created the CFPB outside the authority of Congress, so CFPB regulations can be promulgated without Congressional approval or oversight.  It’s a consolidation of power, unlike anything this country has seen.  It has the ability to impact every American consumer and businesses far beyond the financial services industry including education, auto dealers, and even pothole repair in Tennessee.

Consumer advocates can and should rally behind the concept of educating consumers about the real cost of financial products, their rights to fair debt collection practices, and the consequences of over-extending when borrowing for education.  What consumer advocates shouldn’t support is the CFPB veering away from the original intent of its own creation and focusing, to the almost complete exclusion of education programs, on regulations that ultimately seek to tell consumers how to spend their hard-earned money. 

In short, the agency has gone from protecting consumers from fraud, to taking up the mantle of protecting consumers from themselves.  By redirecting efforts and resources away from education campaigns to regulation, the government has effectively told consumers that they are not smart enough to make their own decisions and that the CFPB would determine what products are appropriate for the marketplace and how consumers should use those products. 

Americans disagree.  In the same poll referenced above, 78% believe it is the responsibility of the consumer to decide which financial services products are best for their family – not the government. 

Taking the nanny state a step further, the CFPB has also embarked on a massive campaign to collect personal financial data from virtually every American consumer.  This effort, which has been acknowledged by the agency, is aimed at monitoring the credit card purchases of up to 95 percent of all American credit cards according to the Bureau’s 2015 Semi-Annual Report.  The agency has given little explanation why such an invasive program is necessary.  They’ve indicated to Congress that Americans can’t opt out and the agency won’t be stopping no matter how much privacy advocates and elected officials demand an end to the program.

The USCC-Zogby poll also found Americans strongly oppose this kind of data mining.  Only 20 percent believed that the CFPB should have the authority to monitor their credit card purchases without their permission.

This ship has been at sea for five years now and suggesting it be sunk is of little utility at this point.  The CFPB is here to stay, but the ship clearly needs a serious course correction to prevent marketplace overreach and threats to consumer choice.  That can’t be done while it sails along invisible to the public radar. 

On this fifth anniversary, Members of Congress must pass legislation to establish new leadership of the CFPB by bipartisan commission, rather than a single, unelected bureaucrat. The CFPB needs to have the oversight of Congress through the appropriations process like virtually every other executive agency.  It needs to realign its mission back toward its original mandate.  Doing that just might give us a consumer watchdog that truly respects consumer privacy and freedom. For now, it seems consumers need protecting from the consumer protector.  

Wise is a senior adviser to the United States Consumer Coalition, a Washington DC-based national non-profit organization that works to protect consumer freedom.