Op-Eds

“This is a case about executive power and individual liberty.” So began last week’s U.S. District Court of Appeals decision, which ruled that an oft-touted pet project of the Obama administration was structurally unconstitutional.

That project is the Consumer Financial Protection Bureau, and power is its aim, specifically regulatory power.

The Consumer Financial Protection Bureau was established in 2011 with the purpose of protecting consumers from predatory financial practices. Like Obamacare, this agency was created by rushing legislation through a Democrat-controlled Congress in 2010. Also like Obamacare, its problems were made manifest as soon as it took effect.

The agency threatened private businesses and enacted harmful, ill-advised regulation and enforcement actions. It did so across vast swaths of American economic life, including credit cards, auto lending and leasing, student loans and home mortgages, to name a few.

In Nebraska, community banks and credit unions are among the entities feeling the effects of the agency’s misguided rules. My constituents have told me they worry that the compliance costs associated with the agency’s rulemaking will eventually put them out of business.

Consider: Under the Home Mortgage Disclosure Act, credit unions and other mortgage lenders are required to submit mortgage-related data to the Consumer Financial Protection Bureau. Despite this, the agency proposed, in a recent rulemaking, to add even more data points, in some cases more than doubling the amount lenders are required to collect and report.

Financial institutions now fear they will have to hire additional lawyers and fewer loan officers, ultimately reducing their ability to offer loans in their local communities.

Everyone agrees that community banks and credit unions did not cause the financial crisis, yet this agency still heaps burdensome regulations and data collection requirements upon them.

Because Dodd-Frank gave the agency deference in interpreting federal consumer financial law, it went largely unchecked by the courts until this decision. The court ruled that the agency’s structure is not only overbearing, but also unconstitutional.

Specifically, it decried how the bureau operates under a single director rather than a multi-member board: “The CFPB’s concentration of enormous executive power in a single, unaccountable, unchecked director not only departs from settled historical practice, but also poses a far greater risk of arbitrary decision making and abuse of power, and a far greater threat to individual liberty, than does a multi-member independent agency.”

The original design of the Consumer Financial Protection Bureau included a five-member board of overseers. At the time, then-House Speaker Nancy Pelosi, Rep. Barney Frank, then-Harvard law professor Elizabeth Warren and President Barack Obama all supported this plan.

But one-party control of Congress and the White House emboldened the agency’s proponents to scrap that idea. They chose to consolidate power in a single person.

Make no mistake: This consolidation of power is the crux of the matter. The court made this point clear, stating that the current director, Richard Cordray, “enjoys more unilateral authority than any other officer in any of the three branches of the U.S. Government, other than the president.”

For the past two Congresses, I have introduced legislation to transition the agency’s leadership from a single director to a bipartisan, five-member board.

The Consumer Financial Protection Board Act is a commonsense measure that would create the agency originally intended by advocates. Each member would be appointed by the president and confirmed by the Senate. Congress should pass this legislation.

The court correctly identified power and liberty as the fundamental principles at issue with the bureau. The court’s decision and my legislation work to strengthen liberty.

Defenders of the agency’s current structure, knowingly or not, are promoting power. No doubt they believe their intentions to be pure. But as John Adams once wrote to Thomas Jefferson, “power always thinks it has a great soul and vast views, beyond the comprehension of the weak.”

The American people prefer power to be checked. So do I. The administration should, too.