Truth is stranger than fiction in Washington D.C. Every satire about government has a real-life counterpart. Much like the runaway bureaucracy in a great recent novel, President Obama’s Consumer Financial Protection Board is growing like a weed, while CFPB officials are busy snooping on our household finances.
In “The Weed Agency,” Jim Geraghty of National Review spins the tale of the fictitious Agency of Invasive Species within the U.S. Department of Agriculture. Created by Jimmy Carter to protect America from weeds, the tiny agency hires bureaucrats who create their own empire with mega-budgets, bloated payrolls and make-believe accomplishments. They interact, Forrest Gump-style, with genuine Washington personalities and events.
The novel works because its comic fiction sounds like truth — a federal agency devoted to protecting us from weeds. Its counterpart is a real-life runaway agency, the still-new Consumer Financial Protection Board. The board’s charge is to protect consumers from greedy businesses (a term treated as meaning any business).
The CFPB was created by the Dodd-Frank Act in 2010 when Democrats ruled the House, Senate and White House. By the end of 2012, it had 970 employees, growing to 1,334 by 2013, and now 1,443. That’s only half the true growth, because the agency spends more on hiring contractors than it does on payroll — $200 million for contractual services in 2014, compared to $171 million on salaries.
Dodd-Frank was drafted explicitly to block all the potential ways to control CFPB’s growth. The agency gets money automatically, with zero budgetary control by Congress. It was given power to re-define and expand its own jurisdiction.
Rather than having to ask Congress for money, the CFPB siphons off part of the Federal Reserve System’s earnings before they are deposited in the U.S. Treasury. The agency’s spending has accelerated like a dragster, from $161.8 million in FY 2011 to $583.4 million for FY 2015.
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What does the agency do with the money?
Like Mr. Geraghty’s weed agency, the CFPB has stretched its jurisdiction. Its core mission was supposed to be to regulate banks and others that take deposits and make consumer loans, which duplicates the work of agencies like FDIC. But Dodd-Frank also gave the CFPB more elasticity than a comics superhero. Agency leaders are stretching into other areas, including those already regulated by agencies such as the Federal Trade Commission.
Empowered to define and regulate whatever it labels a “larger participant” in matters connected to consumer finances, the CFPB’s regulation factory is making financial transactions more expensive to consumers. So far the CFPB has expanded its mandate to control, among other things, anyone making car loans, debt collectors, consumer reporting agencies, money transfers and cash cards.
Lenders respond to the high cost of compliance by tightening credit. So the CFPB counters by threatening discrimination lawsuits, claiming that tighter underwriting has a “disparate impact” on minorities. The bureau is creating a rerun of the mortgage meltdown that pushed America’s economy into its 2008 tailspin — caused when the federal government dictated that banks must make bad loans to avoid supposed discrimination.
The CFPB decrees that lenders must treat public assistance payments and disability payments the same as regular income. They warn that inquiring whether assistance payments will continue would also be considered illegal discrimination.
In the name of protecting us, the CFPB also snoops on us. First it purchased millions of individual credit histories. Now it is establishing, in tandem with the Federal Housing Finance Agency, a “National Mortgage Database Program” to help regulators “better understand” consumer finance.
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According to the Federal Register, this massive database will cover home mortgages going back to 1998 and include your name, address, telephone numbers, birth date, race/ethnicity, gender, language, religion, Social Security number, education records, military records, employment records, bank account numbers and balances, your financial history, recent events in your life, your other assets, mortgage details, credit card balance and payments, details about who lives in your household, the size of your home, number of bedrooms, etc., and even the name of your neighborhood, among other personal data.
The bureaucrats assure us that this treasure trove of personal information is safe from hacking and theft by identity thieves. That puts the CFPB on equal footing with Sony, Target, Home Depot, JP Morgan Chase, the U.S. Postal Service, the Veterans Administration and all the others who claimed their titanic data systems would never hit an iceberg.
We’re paying for this runaway bureaucracy, designed to be launched by Mr. Obama’s appointees and thereafter to be perpetually immune from oversight by Congress. So if the CFPB is protecting us from those nasty businesspeople, who is going to protect us from the CFPB? Perhaps we need another agency for that …
• Former Congressman Ernest Istook is a Republican from Oklahoma. To get Ernest’s free email newsletter, sign up here.
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