The GOP's absurd crusade against consumer protection

Republicans want President Trump to axe the head of the Consumer Financial Protection Bureau.

The CFPB, if you'll recall, was the agency created by the Dodd-Frank legislation to defend American consumers from exploitation by the financial industry. While other agencies' missions include that goal, none are singularly devoted to it, so it used to get sidelined. Supporters already credit CFPB with returning $11 billion to wronged Americans, and with breaking open the Wells Fargo scandal.

The head of the CFPB is Richard Cordray. According to the laws that established the agency, his term doesn't expire until July 2018. So firing him now would almost certainly spark a lawsuit against the White House.

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But Sens. Ben Sasse (R-Neb.) and Mike Lee (R-Utah) recently wrote a letter calling on President Trump to do just that anyway. It's the latest salvo in a GOP beef that goes back to the CFPB's founding.

But what on Earth could they and their fellow Republicans have against the agency, anyway?

Well, they say it isn't beholden to Congress or the president. The CFPB's budget isn't subject to Congress' annual appropriations process, it's headed by one director rather than a multi-person board, and the president can't fire the leader for just any reason — only for cause, like neglect of duty or corruption. Republicans argue this setup makes the CFPB less accountable, that it's prone to abuse of power, and that its rulemaking might be susceptible to whiplash.

None of this passes the smell test.

First, the CFPB isn't the only federal agency with these characteristics, and in some ways it faces more constraints. For instance, other financial regulators can veto its actions.

Second, multi-person leadership is often less accountable than a directorship, since groups diffuse responsibility. Plus, in an agency headed by a commission, whatever party has the majority can just steamroll the minority.

Third, the Administrative Procedures Act already requires agencies to go through a notice-and-comment process before making any rule changes. "The whole reason for congressional delegation to agencies is effective policy implementation," Adam Levitin, a Georgetown law professor and former member of the CFPB's Consumer Advisory Board, wrote in December. "The Congress itself is incapable of implementing and administering the nitty-gritty details of policy."

Now, the CFPB is unique among agencies in how it combines that independence from executive firing with the singular director. Conservatives argue that combo goes too far and is unconstitutional. And in October, a federal appeals court agreed in a 2-to-1 decision. That decision hasn't taken effect pending an appeal. But crucially, the plaintiffs wanted the court to shut down the whole agency. Instead, the court went with the most obvious and sensible solution: Just change a few words in the legislation to let the president fire the CFPB director at will, and otherwise leave it as is.

Which brings us back to the looming dismissal of CFPB head Richard Cordray.

Now, Cordray disagrees with the court's decision, but that's hardly a reason to fire him. No, the real reason Sasse, Lee, and the rest of the GOP want Cordray gone is the same reason any party that's just overthrown its rivals would want that rival's appointments gone: They don't like Cordray's agenda.

Under Cordray's watch, the CFPB has clamped down on payday lenders, issued rules against the use of arbitration clauses in financial contracts, and, Republicans argue, created regulations that hurt community banks, among other things. Firing Cordray is a way to roll those changes back. (As are the larger goals of replacing the CFPB head with a multi-person commission, bringing its funding back into the annual appropriations process, or just killing the agency outright.)

On the substance: Smaller banks have been dying for the last three decades, and the arrival of Dodd-Frank and the CFPB didn't really affect the trend. The main thing killing them off is decades of weak economic growth. Meanwhile, arbitration clauses have been a great way for big companies to avoid accountability for wrongdoing. The clauses legally forbid customers from suing, leaving them with little recourse if they get screwed over.

As for the complaint that clamping down on payday lending will "reduce access to credit for average consumers," as Sasse and Lee put it, here's the deal: To function smoothly and humanely, credit markets need their customer base to have a certain amount of wealth and income. If a population is poor enough, the only possible way private markets can offer them credit while still making a profit is through predatory lending. Perversely, access to credit is actually more expensive for the poor than the rich. The human results of payday lending and its ilk can be catastrophic, as people already on the financial edge are bled dry by ever-increasing interest rate payments and fees. To suggest that the solution to this problem is taking the shackles off the predators is perverse.

What's especially discouraging is that Sasse and Lee are the ones taking the lead here. Sasse made waves in 2016 as an outspoken opponent of Trump's candidacy, and Lee has a reputation as a "communitarian" who looks askance at conservative economic orthodoxy. In other words, these guys are supposed to be the reasonable ones.

Unfortunately, the one plausible complaint they have with the CFPB requires a simple technical fix. The rest of their beef is just Republicans' same old, same old.