July 21 marks the sixth anniversary of the Consumer Financial Protection Bureau’s creation. Created with good intent following the financial crisis, CFPB’s breathtaking lack of accountability and proclivity for excessive regulations have harmed consumers and made it difficult for businesses to create jobs.
Unlike every other federal agency, CFPB is led by a single director who answers to no one and can be removed only for an “egregious act.” There is no method for oversight by the people’s elected representatives. According to the D.C. Court of Appeals, the unelected CFPB director “enjoys more unilateral authority than any other officer in any of the three branches of government of the U.S. government, other than the President.”
Due to the lack of oversight, CFPB has been free to create excessive regulations, which restrict job growth, restrict access to credit options and increase the cost of credit.
The lifeblood of our economy and job growth are entrepreneurs and small businesses. However, these groups have been disenfranchised from the financial market while choices and opportunities for small investors have been greatly restricted by CFPB rules and oppressive regulations. For example, FDIC data show small business loans are down 1.5 percent from pre-crisis levels. The number of commercial loans under $1 million has fallen 14 percent from 2008 to the third quarter of 2016.
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Perhaps most troubling, CFPB’s excessive regulations have harmed the very people the agency is supposed to protect. Access to financial services has diminished, with only two new U.S. commercial banks chartered in 2016, down from 228 the year before the recession. Prior to CFPB, the average monthly account balance needed to qualify for free checking was $250, but that has now risen to $750. Under CFPB, the share of Americans without access to a bank has grown by half a million.
Should we, in response, do away with regulation and accountability? Certainly not, but the evidence points to the need to “right size” our regulatory environment, removing unnecessary or duplicative regulations and restoring economic freedom. As Charlotte’s representative on the House Financial Services Committee, I am working to pass the Financial CHOICE Act, which would create accountability for the CFPB and replace the unelected “financial dictator” with a bipartisan committee.
Washington’s regulatory burden costs consumers and businesses $2 trillion per year. When banks are hiring more compliance officers than loan officers, and access to free checking and affordable loans are on the decline, we need to rethink our regulatory environment.
U.S. Rep. Robert Pittenger of Charlotte, a Republican, represents North Carolina’s 9th District.