In the latest TIME, Michael Crowley scarcely disguises his disappointment — along with the disappointment of numerous left-of-center sources he quotes — that the Obama administration has yet to appoint Harvard law professor Elizabeth Warren as the first director of a new Consumer Financial Protection Bureau.
Though the article is generally a one-sided endorsement of Warren’s candidacy, Crowley deserves a little credit for at least stating the key concerns any fan of limited government should have about the agency.
The problem, argue [David] Hirschmann [of the U.S. Chamber of Commerce] and Republicans in Congress, is the office itself. The bureau will have a staff of several hundred, empowered to snoop around the books of big financial institutions like Wall Street banks. Critics say the office will have too much power and not enough oversight. The bureau’s legal mandate to protect consumers from “unfair, deceptive or abusive acts and practices and from discrimination” is dangerously broad, they say, and is a recipe for overburdening businesses. (The bureau is still establishing the exact scope of its authority but wants jurisdiction over consumer-finance companies like debt collectors and makers of prepaid debit cards.) Those critics also fret that the law makes the watchdog’s decisions too hard to overrule, requiring a two-thirds vote from the 10-member Financial Stability Oversight Council. Democrats say no other regulator faces such an override. …
… Though its outcome is uncertain, the Warren fight is only a subplot in a larger battle over last year’s Dodd-Frank financial-regulatory-reform bill. Named for its chief Democratic sponsors, Representative Barney Frank and former Senator Chris Dodd, it was a complex beast of a law that tackled everything from CEO pay to bank-capital requirements to rules governing exotic financial instruments like derivatives. But the bill punted myriad details to federal regulators, asking them to hammer out no less than 385 new rules. A year later, that rulemaking is far behind schedule, owing in part to corporate lobbyists swarming regulators.
Why should an unaccountable new federal bureaucracy raise red flags? Ask John Stossel.