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CFPB Has Overstepped its Authority



By Nate Scherer, American Consumer Institute


The Consumer Financial Protection Bureau (CFPB) has an important role of protecting consumers’ interests in the financial sector. As such, the Bureau is responsible for regulating in a manner that does not harm consumers or businesses. 

This makes the Bureau a powerful institution with regulatory reach across a wide range of economic issues and, as a consequence, consumer lives. Unfortunately, the Bureau currently lacks accountability and has increasingly become the victim of mission creep, harming consumers and businesses in the process.

In a digital ad campaign aimed at reining in the Bureau, the U.S. Chamber of Commerce now echoes this alarm.

The U.S. Chamber emphasized that, particularly under the leadership of Rohit Chopra, the CFPB has increasingly pushed the boundaries of its authority to enforce a narrow definition of how the financial market should operate. While making vague pronouncements about the importance of upholding fair and competitive markets, the Bureau has repeatedly demonstrated a willingness to engage in aggressive behavior intended to make businesses capitulate to its vision.

In March, the Bureau announced a change to its Supervision and Examination Manual that would allow Bureau examiners to investigate financial institutions for alleged discriminatory conduct under its “unfair, deceptive, and abusive acts or practices” authority, even where fair lending laws may not typically apply. Outside observers saw this move as an indication that the Bureau is indeed taking a much more expansive view of its statutory authority and is willing to closely monitor companies that it believes run afoul of the unfairness standard.

Another example deals with the Bureau’s interpretive rule. The Bureau has recently expressed an openness towards delegating CFPB enforcement powers to state attorneys general so that they can bring claims against companies. The problem with this understanding of the interpretive rule is that, while permitting certain enforcement prohibitions of the Dodd-Frank Act, it was never intended to allow states to enforce other statutes such as the Truth in Lending Act. This new reading demonstrates a willingness on the part of the Bureau to challenge the limits of its powers.

CFPB Director Chopra himself is also responsible for significant mission creep at the Bureau. As the Chamber notes, Chopra has routinely made provocative comments that express his desire for a more muscular CFPB that dictates what types of financial services are available in the consumer market, and under what circumstances. For instance, in a March speech at the University of Pennsylvania Law School, Chopra advocated for capping the size or growth of business assets, prohibiting certain types of business practices, and requiring divestitures of certain product lines, among other dangerous suggestions. He insists that such measures are necessary to protect consumers since companies may interpret ordinary financial penalties as simply the cost of doing business and carry on with anticompetitive practices.

Such aggressive proposals by the Bureau under the leadership of Chopra are a clear and present danger to the consumer market as it exists today. Consumers benefit from the wide array of goods and services that are offered by financial institutions and will be harmed by the actions the Bureau is proposing.

The CFPB mischaracterizes the needs and wants of consumers and, as a consequence, has foolishly committed itself to correcting a problem that does not exist. The financial market is working just as it was intended. Any heavy-handed interference by the government can only end poorly for everyone involved.

The Bureau currently lacks accountability and that needs to change.


Nate Scherer is a Policy Analyst with the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit www.TheAmericanConsumer.Org.