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Corey Lewandowski, an outside advisor to Donald Trump, wants the president to fire federal Consumer Financial Protection Bureau boss Richard Cordray. Lewandowski doesn’t like CFBP rules that make it easier to sue finance companies, but firing Cordray will not be easy. He can only be fired for cause, and that entails a burden of proof. Like the boss, the CFPB itself enjoys special protection.
As a federal agency, it should be funded by Congress, but it isn’t. The CFPB is funded by the Federal Reserve, which is obviously improper. The CFPB has no board to oversee its affairs and Cordray basically calls all the shots. That too is unacceptable, and no surprise that, according to former employees, the CFPB is secretive, partisan and obstructionist. Taxpayers can’t be blamed for seeing the CFPB, the brainchild of Sen. Elizabeth Warren, as bad idea in the first place.
As we noted back in 2012 in Financial Crisis and Leviathan, the CFPB was created during the greatest financial crisis since the Great Depression, not a good time to expand government. The previous administration failed to consider that any government or policy, such as the Carter-Era Community Reinvestment Act, with its lax lending standards, could have played any role in the crisis. The CFPB was based on the assumption that even educated and informed consumers were unable to look out for themselves without help from federal bureaucrats. The CFPB duplicated the work of existing bank regulators and amounted to pure government building, larding up Leviathan through a crisis government played a major role in causing.
As Milton Friedman observed, creating new agencies and programs is easy but eliminating them is practically impossible. Now is the time to show that it can be done. President Trump should fire CFPB boss Cordray and Congress should eliminate the CFPB at the earliest opportunity. That will trim waste and help restore accountability in government.