Why the Battle for Acting Director of the CFPB Wasn’t a Tempest in a Teapot

Quote of the Day:

Once upon a time, the world had two popes. Today we have two acting directors of the Consumer Financial Protection Bureau.

–William McGurn in the Wall Street Journal

That was McGurn's brilliant beginning of a column a few days ago on the reasonably obscure federal agency that then had two heads: one appointed by the outgoing director, as he closed the door on the way out, and the other by the president of the United States.

This was a battle that the president was destined to win and some commentators treated the struggle to appoint a temporary director of the Consumer Financial Protection Bureau as a tempest in a teapot. It was not. The Wall Street Journal explains the high stakes in an editorial this morning:

When Richard Cordray attempted to install his chief of staff as acting director of the Consumer Financial Protection Bureau, his evident aim was to buy enough time to cement his legacy—particularly a just-finalized rule that the agency expects will wipe out half or more of the short-term lending industry. On Tuesday a federal judge thwarted Mr. Cordray, holding that President Trump acted within his authority by appointing Mick Mulvaney to moonlight as acting CFPB director while continuing to lead the Office of Management and Budget.

On his first day at the bureau, Mr. Mulvaney put a freeze on new rules and guidance. But that doesn’t solve the problem of the payday-lender rule. Mr. Mulvaney acknowledged that he cannot simply recall rules that have already gone out the door. Repealing a final rule typically requires restarting the rule-making process, which can take years to complete.

But Mr. Mulvaney can stop the payday-lender rule by putting on his OMB hat and invoking the Paperwork Reduction Act of 1980. That law is generally thought of as—actually, strike that. Nobody ever thinks about the Paperwork Reduction Act. It has about as much currency in Washington as the Filled Cheese Act of 1896.

The PRA, which was purportedly strengthened in 1995, was an effort to address a real problem. Federal agencies are eager to impose paperwork burdens on citizens and businesses. It costs an agency almost nothing to impose a new record-keeping requirement or reporting mandate. The expense falls on those required to carry it out.

I for one am glad the pay day loans have a chance to survive.

Yes, they are high interest, short-term loans. Well-educated progressives see the signs for pay day loan businesses and the signs conjure up for them  people who  smoke cigarettes, likely have tattoos, and manage their finances badly. They think: Yuck!

But in point of fact a pay day loan can get somebody over a financial hump. The interest rates are extremely high and the loans  are short-term.  But sometimes they are the only solution in a crisis for people who don't have the resources of the elites. It should be the people who make the decision as to whether to seek a short-term loan. They get to determine whether to pay off the loan and move on or to borrow repeatedly. Progressive elites believe that they are entitled to make these choices for other people. 

The other thing to know about the CFPB is that it's name is misleading–rather than protecting consumers, it is a regulation writing entity. This column by a former Barney Frank aide (Frank is the Frank of Dodd-Frank, under which the CFPB was created) explains what the agency really does and why it was not a bright idea to create an agency that was, as CFPB has been, unaccountable to Congress (or anybody else).