Is the Consumer Bureau ‘Unaccountable’ and Ineffective?


Susan Block-Lieb was quoted in a New York Times article about the accountability of the Consumer Financial Protection Bureau.

Alongside a legal showdown over who will lead the Consumer Financial Protection Bureau, the agency also faces renewed criticism — including from the official overseeing the bureau as the case is being considered.

Confusion has reigned as two acting directors have claimed the title: Mick Mulvaney, who was appointed by President Trump, and Leandra English, designated by the departing director of the bureau, Richard Cordray, as his successor.

It is true that the agency was granted significant autonomy under the Dodd-Frank Act of 2010, and specifically intended to be insulated from interference by the industry it oversees. But the claim that there is no oversight whatsoever is exaggerated, and the idea that it does little to protect consumers is inaccurate.

“The nature of the C.F.P.B.’s accountability mechanisms does not lend itself to quick and easy sound bites, but that does not mean it does not exist,” said Susan Block-Lieb, a law professor at Fordham University who has written about those concerns.

There are also ways to override the agency. The Financial Stability Oversight Council, an organization also created by Dodd-Frank that is led by the Treasury secretary, can veto any rule established by the consumer bureau if it has a two-thirds majority and if the rule would imperil the financial system. No other agency’s rules can be tossed out in this way, according to the Consumer Federation.

And while Congress does not have similar veto power, it was able to strike down last month an arbitration rule from the bureau that would have allowed millions of Americans to band together in class-action lawsuits against Wall Street firms. It can also dissolve the agency altogether through legislative action.

The claim that the consumer bureau “doesn’t add much at all to consumer protection” is inaccurate. The Dodd-Frank Act did not confer new financial regulatory powers so much as it consolidated the powers previously held by other agencies into the consumer bureau. But before the financial crisis that prompted the creation of the bureau, Ms. Block-Lieb said, “regulators were asleep at the switch and there were so many of them, it created a collective action problem.”

In its six years of existence, the agency has gone after debt collectors and payday lenders, set rules to protect mortgage borrowers and extracted nearly $12 billion for 29 million consumers in compensation. Ms. Block-Lieb called the criticism of the Consumer Financial Protection Bureau doing little “absurd.”

Are they perfect? Of course not,” she said. “But they’re important.”

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