The Consumer Financial Protection Bureau was created by the Dodd-Frank Act of 2010 to police against supposed “unfair, deceptive, or abusive” practices. Ostensibly, the CFPB is supposed to make financial markets work for consumers and responsible providers alike by establishing clear rules of the road and ensuring markets are fair, competitive, and transparent.

Yet in the years since its creation, the CFPB has been the poster child for a federal agency run amok. Under the current leadership of Director Rohit Chopra, the CFPB has regulated by press release and threat of enforcement.

Several patterns of behavior and structural issues currently exist at the CFPB:

• The CFPB is unique to any federal law enforcement agency ever created. The CFPB exists outside of the Constitution’s three branches of government by acquiring, in perpetuity, up to 12 percent of the Federal Reserve’s annual surplus, making it exempt from the traditional Congressional process of oversight by appropriations. The Federal Fifth Circuit Court has ruled that this funding structure is unconstitutional.
• The Director rules with unconstitutional authority. The CFPB’s structure was unconstitutional from the start; only a Supreme Court ruling in 2020 allowed the President to fire the Director without cause. Director Chopra has kept that spirit alive, shortcutting the traditional regulatory process by using rhetoric and abusive methods on an enforcement crusade with the goal of fundamentally changing the nature of American financial markets.
• The CFPB fails to protect consumers. The lack of oversight of the CFPB has created a federal agency that operates without proper protections for consumer information. In one instance, an employee forwarded the personal information of more than a quarter-million consumers to a personal email account, an obvious major breach of data privacy.
• There is no real notice and comment rulemaking process. The CFPB exercises unparalleled adjudicative and enforcement power over private businesses. Unlike other federal agencies, which typically issue a notice of proposed rulemaking (NPRM) that allows for a comment period before publication, the actions of the CFPB are at the sole discretion of the director. Under Director Chopra, the CFPB has issued informal proclamations via blog posts and speeches on banks and lending, which is a violation of the Administrative Procedure Act.
• The CFPB is creeping into areas already covered by other agencies. For decades, abusive behavior was a field of consumer protection covered by the Federal Trade Commission. Yet the FTC’s policy statements on abusive, unfair, and deceptive practices set self-imposed restrictions that developed widely accepted parameters for consumers and businesses alike. Meanwhile, the CFPB’s new policy statement on abusive behavior lacks limits and fails to consider costs and benefits.