Wall Street Regulation or Something More for this New Agency?

Friday, July 19, 2013
Alyssa A. Lappen

The Senate confirmation of Richard Cordray as Consumer Financial Protection Bureau (CFPB), a new agency created by the 2010 Dodd-Frank law, may end “years of contentious political wrangling” over its leadership, as noted in the Washington Post shortly after the vote. However, opponents of the bureau’s sweeping powers have by no means left the room.

Ultimately, the opposition may help investors, if it has any effect at all on the peeping Toms in Washington D.C., or encourages the public to watch closely the moves of this new powerful giant government agency.

“This bill (creating the CFPB) was supposed to be about regulating Wall Street. Instead, it’s creating a Google Earth on every financial transaction,” Wyoming Senator Mike Enzi warned in a Senate speech opposing Cordray’s confirmation. “That's right: the government will be able to see every detail of your finances. Your permission - not needed,” Enzi said, calling for greater congressional oversight authority.

We tend to agree. Investors surely do not need another federal government agency, particularly one with sufficient power to track their every move.

The CFPB’s most troubling powers fall under the rubric of “study,” under which the agency is tasked to “gather and analyze available information to better understand consumers, financial services providers, and consumer financial markets.” Gather and analyze available information. Well, that would indeed be just about everything, if CFPB so chose to define it.

Of course, the agency did in the last year issue a series of rules to govern mortgage lending and established enforcement actions it could take against big banks, including U.S. Bank, for lending practices deemed abusive. That would also include non-banks that engage in payday lending, debt collection agencies and others.

It’s the stuff that the CFPB could collect, however, namely consumer transaction data, that might swiftly become a problem, if it is not already.

What is to keep this department from becoming another misguided and abusive IRS-type government organism, given its massive power and the total lack of congressional oversight.  

Making certain that Wall Street and banks and non-banks play by fair rules is one thing. But collecting data on consumers is another.

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