Created to live in the shadowy netherworld between the branches of the federal government, the Consumer Financial Protection Bureau is one of the most powerful agencies in Washington and according to reports this week they have big plans for 2015.  Cloistered in the Federal Reserve and virtually unknown to the public, the agency has become a lightning rod inside the Beltway, drawing the ire of both Republicans and Democrats alike.   

Privacy has become a kitchen table issue in America and the new Congress has an enormous opportunity to drive CFPB reform in its first 100 days to not only protect businesses from onerous and capricious regulation but also send a message to the average citizen.  Reform would give the new leadership bona fides with a wide range of demographic groups, jumpstarting an effort to realign Washington consistent with the Constitution and the rule of law.

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The federal government, particularly the Executive Branch, has long sought to increase its power and control far beyond its limited Constitutional role.  The CFPB’s creation represents the zenith of this seemingly constant effort to expand the Enumerated Powers of the central government.  But there can be no doubt that the supporters of Dodd-Frank created a monster that must be tamed. 

People bemoan the often heavy-handed regulations that flow from the Environmental Protection Agency, but at least those rules and determinations are made as part of a public process.  Businesses like utilities that are most impacted by environmental regulations typically have years of notice and additional time to comply with new impositions.  Not so for anyone within the reach of the CFPB – including every bank, lender, consumer and business in the United States. 

The impact on businesses can be devastating.  New regulations and enforcement regimes promulgated with virtually no notice can force businesses to increase compliance costs, be subject to increased oversight or be forced to fundamentally change their business model even if they are completely legitimate. 

It is outside the bounds of the Constitution in every sense.  One wonders whether any Member of Congress who voted for Dodd-Frank reasonably understood the impact of the provisions that created the CFPB.

While bad for business, the impact on consumers comes in the form of fewer choices and higher costs for products and services.

However, the real threat to the American consumer from the CFPB is the further erosion of their privacy.  The CFPB has developed a ‘consumer spying program’ that makes the NSA scandal from 2013 look like a fraternity prank.  With the NSA scandal, the government was able to make the argument that cell phone monitoring was targeted based on patterns of communications and necessary to protect national security.  Some accepted that argument and some didn’t.

The CFPB consumer spying program is presently tracking the purchases of more than 1 billion credit cards in the United States.  The secretive agency has provided no reason for why such a massive data collection and analysis regime is necessary to ‘protect’ consumers. Asked by Members of Congress about the initiative, the agency articulated clearly that Americans cannot opt-out of such monitoring.  The CFPB has refused to suspend the program.

Unlike the NSA scandal, the CFPB spying program indiscriminately tracks purchases and behaviors of ordinary Americans that can be used to create profiles on citizens, spur additional regulations on businesses and - should the data be shared or compromised – could be used for political purposes.

Therein lays the opportunity for the new Congress to gain some much-needed credibility with voters who rank the institution just north of the IRS.  Young people are increasingly concerned about privacy in the digital age.  Libertarians are crusading against this kind of government overreach. Independents are increasingly wary of big government. Online shoppers are guarded of credit card data security.  Users of online products, especially those under the jurisdiction of the CFPB, want more choices, not less. 

Some say that the country needs a watchdog in the wake of the financial crisis to help fight fraud and predatory businesses.  Those are all laudable goals provided someone  is protecting the consumers from the CFPB.

The IRS scandal showed all of us the abuses of power by the political class and bureaucracy are real and happening.  When it comes to the CFPB, the lack of ability for Congress to provide oversight is an invitation for abuse. 

To protect the American consumer from unwanted and unwarranted privacy violations, Congress must act to prohibit the CFPB from obtaining or using a consumer’s private, personal financial information without their knowledge or consent unless there is a compelling legal reason to violate that consumer’s privacy.

To accomplish this important goal, the CFPB should be transferred out of the Federal Reserve and become a standalone independent executive agency subject to Congressional appropriations.  Congress should also replace the single, unaccountable CFPB Director with a transparent, multi-person Commission to run the agency. Finally, the CFPB should be required to obtain a warrant to collect financial data on American consumers, ensuring the protection of due process.

The new Congress has the ability to show the American people they are willing to defend the Constitution and protect their personal freedoms by forcing the CFPB out of the shadows.  In so doing, they will make help restore confidence in their own damaged institution.

Wise is senior adviser for the U.S. Consumer Coalition.