Newsletter - February 2017

As the news media and many citizens spend time debating back and forth about Donald Trump and the Washington scene, little time is given to an examination of various governmental entities that have a major effect on our lives.

It is time to review one of the entities that has incredible power in the country with virtually no oversight.  The Democrat dominated 111th Congress created the Consumer Financial Protection Bureau (CFPB).   The purpose of the Bureau which is part of the Dodd-Franks bill is to promote fairness and transparency for mortgages, credit cards and other consumer financial products and services.  Automatic funding for this board comes from the Federal Reserve and therefore, the agency answers to no one including Congress, the President, voters and the entire democratic process. 

In a recent U.S. Circuit Court of Appeals for the District of Columbia decision, the bureau’s governing structure was deemed to be unconstitutional. 

The CFPB has the power to determine the “fairness” of virtually every financial transaction in America.  The board can launch investigations without cause and can initiate investigations without cause and can impose virtually any fine or remedy.  Due process is not required. 

The CFPB was the brainchild of Elizabeth Warren.  Her 2007 article “Unsafe at Any Rate,” proposed a new regulatory agency to help consumers understand credit products by simplifying disclosures and ending deceptive industry practices.  The goal of the CFPB is good but there are things that happen when legislation is written that hinder those goals. 

The basic premise of any free market is full information.  In 2009, with the economy collapsing and Democrats gaining control of Congress and the White House, Warren increased her criticisms of big banks.  She worked hard to get her agency included in the Democrat Wall Street-reform legislation.  She maintained that effective enforcement of consumer-protection laws required an agency independent from politicians beholden to the financial industry. 

Democrats in Congress worked to make sure that Republicans did not have important positions in any Wall Street-reform legislation.  Therefore, the director has a five year term that could continue indefinitely until the next director’s confirmation.  In order to stop any future Republican-led Congresses from cutting the bureau’s budget, funding would be guaranteed through Federal Reserve profits instead of taxpayer dollars. 

Elizabeth Warren had hoped to be the first director of the CFPB and she led the one-year agency building process.  People who were applying for a position soon learned that loyal Democrats were chosen for her senior Deputies.  One person who worked for the agency gives a clear description of how people were hired.  “I don’t think he believes in the mission” was code for “he might not be a Democrat.” 

President Obama declined to appoint Elizabeth Warren as a director.  On July 17, 2011, President Obama nominated Richard Cordray to be Director. 

There are always challenges with federal agencies but even more when the agency does not answer to Congress.  Some people believe that is good since Congress would not be able to affect the agency.  However, that is the way our government works.

One major criticism of the CFPB are the salaries that people at the agency earn which Congress has nothing to say about.

Thirty-seven CFPB employees earn more than eight Supreme Court Justices who are paid $213,500.  Nineteen CFPB staffers make more than the Chief Justice who is paid $223,500.

181 CFPB employees are paid more than the President’s Chief of Staff, Senior Counsel and Press Secretary.  Those positions are capped at $172,200.

The top grossing CFPB employee is Gail K. Hillebrand who earns $251,288.  She is assistant Director for Consumer Education and Engagement.  Previously, she was a Marketing Manager at Consumers Union.

The next highest earner is Deputy Director Davi Mark Silberman who earns $235,875 including an $8,000 bonus.  Previously, he was the Deputy Counsel for the AFL-CIO.

CFPB Director, Richard Cordray is paid $179,700, a compensation level he apparently chose for himself.

The above information is another example of the depth of the bureaucracy in Washington.

The CFPB has done some good work.  The question is at what cost?  The entire set up of the agency is a classic example of how the bureaucracy works and where so much of our tax dollar goes.


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