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The CFPB: Another New Government Agency to 'Harass Our People and Eat Out Their Substance

We declared our Independence from a king who "erected a Multitude of new Offices and sent hither Swarms of Officers to Harass our People and eat out their Substance."

Citibank Spanish River Branch in Boca Raton, Florida. Photo Credit: Larry Marano/Getty Images for Citibank

The Republican debate in Milwaukee started an important discussion on government bailouts. I agree with Ted Cruz. No bailouts. Period.

Free markets are designed to reward good behavior and punish bad behavior. Bailing out bad behavior causes two problems. It fails to punish the bad behavior and it also fails to wring out of our financial system the product of those bad decisions.

Carly Fiorina used this discussion to note that a government response to market conditions is how socialism comes into the life of a nation.

Citibank Spanish River Branch in Boca Raton, Florida. Photo Credit: Larry Marano/Getty Images for Citibank Citibank Spanish River Branch in Boca Raton, Florida. Photo Credit: Larry Marano/Getty Images for Citibank

Government creates a problem and then insists that a government program must solve it. More government necessarily follows.

The financial crash of 2008 was largely a result of artificially inflated housing markets. President Bill Clinton pushed Fannie Mae and Freddie Mac to lower credit standards for borrowers. Congress added to that by lowering the required down payment for buyers. Wall Street responded by buying up the bad loans and selling them to gullible pension funds.

President George W. Bush proposed the Troubled Asset Relief Program in which taxpayer dollars would buy “troubled” assets off the books of banks.

Once in place, TARP became the tool for saving big money center banks and ultimately other businesses that could attract the attention of politicians.

The United Auto Workers prevailed on President Barack Obama to bail out General Motors. When that deal was done the GM bondholders and creditors were stiffed and the money went to bail out the UAW.

In another response to the financial crisis we passed Dodd-Frank which, as Fiorina pointed out, added so many regulations that only bigger banks could deal with them. That portends bigger bailouts.

She also mentioned another issue that has received almost no attention in the past five years. The Consumer Financial Protection Bureau was created as part of Dodd-Frank and is responsible for protecting us from those greedy, mean-spirited bankers who force us to borrow their money.

The CFPB was cleverly placed under the Federal Reserve. Its funding comes directly from the Fed so that its budget is not subject to Congressional oversight. The Fed is not audited.

Since the Fed has no authority over the CFPB the CFPB only has to tell the Fed how much money they want and they get it.

The first decision made by the new CFPB was to enter into a 20-year rental agreement on a building that was appraised for $154 million. They then undertook a $95 million remodeling program.

During a hearing before the House Financial Services Committee in January 2014 they had already surpassed $145 million in reparations.

They did not like the employee ratings system used throughout our government so they threw it out. Everyone gets a raise and bonus.

Their pay scale is among the most lavish in the government. The top officers make more than the chairman of the Fed or even Supreme Court justices.

With all of this talent you may ask just what do they do that wasn’t being done five years ago?

They are protecting us from the bankers who talk us into taking their money even though we don’t want or need it. They will be tracking every financial decision every one of us makes just to make sure we don’t get tripped up.

A GAO audit found that as of May 2014 the CFPB had collected more than $139 million in civil penalties from lenders. About $31 million of that went to the abused borrowers. Where the rest went we do not know. How they arrived at these decisions is not recorded.

They will track our deposits, checks, credit card activity, student loans, home loans car loans – you get the idea. With all of this information they are going to know more about us than our boss or, in some cases, our spouse.

The Inspector General has concluded that the financial information that they gather is not secure.

What will they do with our information? Whatever they want. Those of you who think I’m exaggerating I remind you of the IRS.

The CFPB has the potential to be a bigger more intrusive government agency than the IRS. It and Dodd-Frank are going to put more government control over the financial markets and are going to cause more financial problems for America than the financial collapse they were designed to prevent.

Carly Fiorina has it right. Responding to government-caused problems with government solutions is the camel’s nose under the tent for socialism.

TheBlaze contributor channel supports an open discourse on a range of views. The opinions expressed in this channel are solely those of each individual author.

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