In the latest GOP Presidential debate, Carly Fiorina attacked the Consumer Financial Protection Bureau (CFPB), calling it an agency with “no congressional oversight.” That statement is not just “half true” as it was rated by Politifact, a fact-checking website run by the Tampa Bay Times. It’s untrue.
The CFPB, as Politifact said, does not get its funding through annual congressional appropriations. But the Bureau is a bank regulator, and not a single one of the other bank regulators – the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), or the Office of the Comptroller of the Currency (OCC) – is funded that way either. And for good reason: as far back as 1864, when the OCC was created, this country has sought to bolster the independence of bank regulators by insulating them from the politically-charged congressional appropriations process. This means that even if someone has merchant accounts in the UK and uses a US banking option, these are regulated in an independent manner.
In reaching its judgment that “the bureau has an unusually low amount of congressional oversight,” Politifact appears to have relied on two known critics of the agency, Todd J. Zywicki of George Mason University and Brenden D. Soucy, a Miami lawyer.
By consulting a wider range of authorities, Politifact would have gotten a fuller picture. Arthur Wilmarth of George Washington University Law School, for example, has described the CFPB’s powers, governance and funding arrangements as “hardly unprecedented among federal financial regulators.” Like virtually all regulators, the Consumer Bureau is subject to the many requirements of the Administrative Procedures Act. In addition, as Adam Levitin of Georgetown University Law Center pointed out to a House committee in 2011, the Bureau’s budget, unlike that of the other financial oversight agencies, is capped at a specified percentage of the Federal Reserve’s operating budget, while its decisions are uniquely subject to review and rejection by a council of other regulators.
When all the facts are taken into account, it is clearly neither true nor even half-true to characterize the CFPB as “a vast bureaucracy with no congressional oversight that’s digging through hundreds of millions of your credit records to detect fraud.” Fiorina, in making that statement, is simply repeating a false narrative developed by banks and lenders against the first and only and financial oversight agency with a mandate to put the interests of consumers ahead of the power and profits of the financial industry. By giving Fiorina credit for being even partially correct, Politifact, too, is buying into that narrative.