Chairman Wagner: CFPB is an Unconstitutional Behemoth

Mar 21, 2017
Press Release

WASHINGTON –Today, Congresswoman Ann Wagner (R-MO-02) held the first Oversight and Investigations Subcommittee hearing of the 115th Congress. The hearing, “The Bureau of Consumer Financial Protection’s Unconstitutional Design,” examined whether the structure of the CFPB violates the Constitution as well as the structural changes needed to resolve any constitutional vulnerabilities. 

"Created under the Obama-era, 'Washington knows best' mindset, the Consumer Financial Protection Bureau is an unconstitutional behemoth that side-steps accountability to Congress and the President,” said Chairman Wagner following the hearing. “With an imperial Director, the CFPB continually expands and overreaches its regulatory authority at the expense of American families who are desperate for economic relief. It is time we hold Director Cordray responsible and restructure the CFPB within the framework of our Constitution."

Congresswoman Wagner’s Opening Statement, as prepared:

For the past eight years, the American people under the Obama Administration have grown complacent with the unchecked power emanating from Washington and its complete disregard for the Constitution.  From health care to energy to financial services, Washington has worked to plan every aspect of your life and decide what’s best for you.  Now more than ever, we have a new obligation to examine the checks and balances of our federal government and ensure that our Constitution is reflected by it.  It’s time to bring accountability back to Washington for “We the People.” 

Nothing embodies the “Washington knows best” mindset more than the Consumer Financial Protection Bureau by removing choices and making access to financial products more difficult under the guise of consumer protection.  Since the creation of the CFPB, we have seen regulations that make it more difficult for consumers to qualify for a mortgage, obtain an auto loan, and access forms of credit.   

The super independence of the Bureau has demonstrated how a lack of checks and balances can lead to abuse.  In the majority opinion of a case last October, a federal judge ruled that “the director of the CFPB is the single most powerful official in the entire US government, other than the President.”  As a result of a lack of safeguards, we have seen examples of widespread discrimination within the CFPB itself under Director Cordray’s leadership, to which this committee has held five hearings on itself. 

Additionally, without the ability of Congress and the Executive to carry out proper oversight, the CFPB has become confident in its cloak of unaccountability by pursuing policy and regulating entities outside of its authorized scope to the detriment of consumers. 

Without proper checks and balances, the natural tendency of government is always to continue expanding its power and reach, and the CFPB has been a perfect example. 

The CFPB is unaccountable to Congress in that it does not rely upon Congress for funding, instead taking its funding stream from the Federal Reserve to be allotted by the CFPB Director with no review by Congress.  As a result, the CFPB has grown comfortable in repeatedly ignoring oversight requests made by this committee, including for subpoenaed records. 

Additionally, the CFPB is unaccountable to the President as well by being headed by a single Director who can only be removed “for cause” rather than “at will.”  The Constitution vests the executive power in an elected “President of the United States of America” and not in various unelected agency and bureau heads. 

Lastly, the CFPB is unaccountable to the judiciary, as Dodd-Frank mandated that courts give extra deference to the CFPB’s statutory interpretations, even if they are not granted exclusive interpretive authority.  In this way, the CFPB can reinterpret consumer laws that are already on the books with established case law and have been regulated by other agencies for years. 

Today, we will be examining the unconstitutional structure of the CFPB and how it has yielded unaccountability to Congress and the executive branch.  Additionally, we will look at ways that the CFPB can be restructured in order to make the bureau constitutional, as well as more accountable to Congress and the Executive.  Finally, we will be looking at what authority the President currently has to remove the CFPB Director, even before the resolution of ongoing litigation.