By Dan Calabrese ——Bio and Archives--February 6, 2017
American Politics, News | CFP Comments | Reader Friendly | Subscribe | Email Us
With Friday's signing of a new executive order by President Trump, the alternating sides face a pivotal showdown over one of the signature safeguards enacted under the Dodd-Frank Wall Street reform act after the 2008 financial crisis. The barely two-page order never mentions the CFPB. However, it directs the Treasury secretary to examine the extent to which current laws, regulations, and oversight requirements help promote six core principles — including restoring "public accountability within federal financial regulatory agencies," and "empowering Americans to make independent financial decisions and informed choices." CFPB supporters and critics both expect those provisions will set the Republican-controlled congressional stage for restructuring the regulator's leadership from a single director loosely accountable to the president and only removable for good cause to a bipartisan board. For the first time, Congress could also win authority to set the CFPB's annual budget. Such changes have repeatedly been urged by Rep. Jeb Hensarling, R-Texas, who has used his chairmanship of the House Committee on Financial Services to rail against what he's characterized as the CFPB's answerable-to-no-one makeup, and the virtually unchecked authority of Richard Cordray, the regulator's director.
Circumventing the Constitution took two steps. First, Democrats inserted a few clever workarounds into the Dodd-Frank Act, which created the CFPB on July 21, 2010. Commissions such as the one Warren first proposed are ostensibly bipartisan, so a president-appointed director would lead the new agency. Since there might be a Republican president one day, the director would be practically irremovable after Senate confirmation to a five-year term that could extend indefinitely until the next director’s confirmation. To prevent future Republican-led Congresses from cutting the bureau’s budget, funding would be guaranteed through Federal Reserve profits rather than taxpayer dollars. Next, the enlarged new agency would be staffed with Democrats, top to bottom. There would not be a Republican director nominee for at least five years, and if one was ever confirmed, entrenched left-wing managers could undermine “attempts to weaken consumer protection.” The plan wasn’t perfect, but it was pretty good. Warren, who had hoped to be the CFPB’s first director, led the one-year agency-building process. She chose loyal Democrats to be her senior deputies; they hired like-minded middle managers, who in turn screened lower-level job seekers. It was too risky for interviewers to discuss politics, so mistakes were possible. I was one of them. As a Jewish graduate of a liberal college living on Manhattan’s Upper West Side, I fit the stereotypical Democratic profile. In fact, my primary influences were my business-school professors at the University of Chicago, the epicenter of free-market capitalism. I supported the agency Warren proposed in 2007 for the same reason I had worked at the Securities and Exchange Commission — accurate information improves markets’ efficiency. I had not read important sentences at the bottom of the Dodd-Frank Act’s thousands of lines of text. In March of 2011, I interviewed with Richard Cordray, the pre-operational agency’s new enforcement chief. By May, I had surrendered my prized rent-stabilized apartment and moved to Washington to be the CFPB’s 13th enforcement attorney. I would not have been so lucky two months later. As screening techniques improved, Republicans were more easily identified and rejected. Political discrimination was not necessarily illegal, but attempts to hide it invited prohibited race, gender, religion, and age discrimination. In retrospect, the Office of Enforcement’s hiring process, which was typical for the bureau, violated more laws than a bar-exam hypothetical. As screening techniques improved, Republicans were more easily identified and rejected. Job seekers interviewed with two pairs of attorneys and most senior managers. All Office of Enforcement employees were invited to attend the weekly hiring meetings, where interviewers summarized the applicants. Any attendee could voice an opinion before each candidate’s verdict was rendered; even a single strong objection was usually fatal. Note taking was strictly forbidden, and interviewers destroyed their records after the meetings. I never missed one. Clear verbal and non-verbal signals quickly emerged. The most common, “I don’t think he believes in the mission” was code for “he might not be a Democrat.” At one meeting, Kent Markus, a former Clinton-administration lawyer who had joined the bureau as Cordray’s deputy, remarked that an applicant under consideration “sounds like a good liberal to me.” After a few seconds of nervous laughter and eye contact around the room, Markus recognized his slip. “I didn’t say that,” he awkwardly joked. The episode so unnerved one attorney that he never attended another hiring meeting.
View Comments
Dan Calabrese’s column is distributed by HermanCain.com, which can be found at HermanCain
Follow all of Dan’s work, including his series of Christian spiritual warfare novels, by liking his page on Facebook.