The 5th Anniversary of the CFPB does not have a lot of people celebrating

Anniversaries are usually a cause for celebration. When a marriage lasts for 50 years or an employee gets in 10 years with a company, these occasions usually call for at least a little bit of celebrating. The Consumer Financial Protection Bureau (CFPB) recently marked its 5th year in existence. Other than a few people (mostly those within the Obama administration and the Bureau itself), though, there were not a lot of folks celebrating this anniversary. As a matter of fact, there is more than a little bit of national upset that the organization still exists at all. The Republican Party recently went on record with its dislike of the CFPB; calling it a “rogue” organization that needs to be done away with, or drastically overhauled.

No matter what a person’s individual view of the CFPB is, there is no arguing the fact that this organization has managed to garner more than its fair share of enemies over the past five years. The CFPB has earned a reputation for aggressively pursuing financial institutions that utilize practices that the Bureau disagrees with. The CFPB has used its massive amount of unchecked authority to come down hard on small banks, credit unions and most notably on payday lending companies. Heck, the CFPB has even gone after debt collection agencies, educational lenders and some telecommunications companies.

For its efforts to date, the CFPB boasts that it has been able to give over $11 billion in financial relief to more than 27 million people around the U.S. They have also been happy to report that they have forced certain companies to fork over close to half a billion dollars in penalty fees. According to those who support the CFPB, this group is just getting started and is primed to do even more in the future.

It should not surprise people to learn that the CFPB was pretty much master-minded by Elizabeth Warren. She wanted to bring together the various regulatory powers that were spread across various organizations to a singular agency. She said the goal of the CFPB was to protect average American consumers from financial misdoings. Congress officially helped to create the CFPB in 2010 under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Bureau started doing business in July of 2011. Obama didn’t give the job of overseeing the CFPB to Warren. Instead, he saw fit to put former Ohio Attorney General Richard Cordray in charge. About two years after that, Cordray got official Congress confirmation.

Those who see the world through rose colored glasses will likely chalk up the creation of the CFPB as a crowning achievement for President Obama. That does not detract from the fact, however, that the CFPB has ruled a little too fast and loose on certain decisions that it has made over the years. It has fired off lots of enforcement actions and sued companies in federal court for what Cordray sees as practicing illegal activities.

Alan Kaplinsky is a lawyer who works for various financial companies. He said, “A lot of people, including myself, believe that the CFPB’s overriding philosophy has been to regulate through enforcement rather than actually issuing regulations. And it is precisely this kind of heavy handed approach to regulation that has made the anniversary of the CFPB less of a cause for celebration and more of a reminder that massive changes need to take place to get this agency in check once and for all. If not, by the time we get around to the CFPB’s 10th anniversary the entire financial sector of this country might be in very dire straits.


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