Last week Senate leaders struck a deal to preserve the filibuster but this was much more than a question of procedural traditions. The tradeoff called for confirmation votes on President Obama’s nominees to head various federal agencies. So the Senate proceeded to confirm Richard Cordray as the first permanent director of the Consumer Financial Protection Bureau (CFPB). The key word there is “permanent.”
This CFPB is a new federal agency the Obama administration created during the worst economic downturn since the Great Depression, even as it created vast new entitlements like Obamacare. The premise of the CFPB is that American consumers are incapable of discernment when it comes to financial products and services, so the federal government must look out for them. In the government view, powerful, predatory companies, are entirely to blame for the financial crisis, so the only solution is a new federal agency. Actually, government regulation such as the Community Reinvestment Act, a legacy of the Carter Era, was the flywheel of the financial crisis. So the CFPB is an agency created primarily due to the failure of government.
As opponents pointed out, the CFPB duplicates the work of existing bank regulators and the Federal Trade Commission, not to mention individual Americans. In its first 14 months the CFPB didn’t do much other than expand an already bloated and wasteful government. But it did provide a service by confirming that federal agencies are easy to start but practically impossible to abolish, regardless of performance. If the Reagan administration failed to abolish the federal Department of Education, neither the Obama administration nor any Republican administration on the horizon is unlikely to cut loose the CFPB. Like other agencies the CFPB is staffed with overpaid, overpensioned government workers, prone to waste and inefficiency, and with a vested interest in the expansion of government in general and the preservation of their agency in particular.
Meanwhile, in the recent Senate deal the filibuster lives on but that is a hollow victory. The real losers are American taxpayers, who must fund redundant, unnecessary but permanent agencies like the Consumer Financial Protection Bureau.