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Hensarling lies about the Consumer Financial Protection Bureau on NPR

Jeb Hensarling is resorting to “alternative facts” in his quest to drag the US back to the bad old days of “innovative” mortgages and unregulated financial companies that gave us the Great Recession.

Jeb Hensarling (image credit: Dallas Morning News)

Jeb Hensarling (image credit: Dallas Morning News)

Last week I heard an interview on Morning Edition that had me fuming at my radio. Steve Inskeep interviewed Representative Jeb Hensarling (R-Texas) about Hensarling’s goal to eliminate the Consumer Financial Protection Bureau (CPFB). After listening to the interview, I had a question for Mr. Hensarling: are you a liar, or do you actually believe your own bullshit?

Hensarling, who has been pursuing the destruction of the CPFB as the chairman of the House Financial Services Committee, said

Somebody has to protect consumers, not just from Wall Street but protect them from Washington as well. And the Consumer Financial Protection Bureau has hurt consumers. Free checking at banks has been cut in half. Banking fees have gone up. Working people are finding it more difficult to get mortgages.

The bottom line is the best consumer protection are competitive, innovative markets that are transparent.

Yes, it’s true that some working people are having a hard time finding mortgages, but it’s not because mortgage markets aren’t transparent, competitive, or innovative. It’s because those working people are not making enough money to afford the house they want, or have poor credit histories. Free checking isn’t available as much any more because banks are no longer allowed to make up the costs of the free checking by charging exorbitant overdraft fees. In other words, the CPFB is doing exactly what it’s chartered to do – protect consumers from predatory banks and bankers.

cfpb_logoThe CPFB has also forced banks to write mortgages in plain, not legal, language. And to disclose how much you would need to spend to pay off your credit card debts. And to plainly say what their fees are. Sounds like transparency to me.

And let’s not forget – it was “innovative” mortgages and financial markets that led to the Great Recession in the first place. And Hensarling wants us to go back to those bad old days why? Maybe it has something to do with the fact that, over his career in the House, Hensarling has received more than 50% of his campaign funds from the financial services industry.

Let’s continue. Hensarling has said that the CPFB is “unconstitutional,” and Inskeep asked him about that. Hensarling’s response:

It is unaccountable to the president. It is unaccountable to Congress. It is unaccountable to the courts.

…It has no accountability to the Federal Reserve. Ask Janet Yellen, the chair. They create their own funding stream.

And yet, a little research turns up that the CPFB actually is accountable. To the Presidency. To Congress. To the Judiciary. They do create their own funding stream, like all financial regulatory agencies do, but their budget is capped according to the very legislation that brought the CPFB into existence.

It strikes me that Hensarling’s definition of “unacountable” must be very different from the one I found in the dictionary. Or he’s incompetent and unqualified to be the Chairman of the House Financial Services Committee. Or he’s lying.

Inskeep also asked Hensarling what would replace the CPFB in the event it was destroyed. Hensarling responded that other agencies would pick up the CPFB’s duties:

Well, number one, we have a Federal Trade Commission that is in charge of enforcing many of our consumer protection laws. We have bank supervisors at the Office of the Comptroller of Currency. They could do it. In addition, we could have consumer protection perhaps focused in one particular agency.

Hensarling is saying that other agencies could do what the CPFB is doing. That’s true, of course, but there’s a small problem with that – the CPFB was created specifically because seven different agencies that were all supposed to protect consumers to some greater or lesser extent – weren’t. Oh, and two of those agencies were the FTC and the Office of the Comptroller of the Currency. So, if the CPFB was needed because those seven agencies had all failed where the CPFB is succeeding, then devolving the CPFB’s responsibilities back to those agencies would be a good idea why?

The CPFB was created because those agencies had been subject to “regulatory capture,” which is when an agency is no longer able to effectively regulate their industry because the agency and industry have become too cozy. And again, Hensarling wants us to go back to the bad old days that got us into the Great Recession.

And one last quote from Hensarling:

No one person in America, particularly an unelected person, should have the power to choose our credit cards for us, to choose our mortgages for us. That is offensive, and that needs to end. It is not part of due process. It is not part of checks and balances. And the history of this agency is that they have hurt consumers because they’re hurting competitive markets and economic choice.

Warning! Warning! Bullshit alert!

Warning! Warning! Bullshit alert!

So it’s unAmerican to keep people from getting mortgages that they can’t afford, protect consumers from being gouged by bank fees, and aid consumers in understanding how it might be a bad idea to get a 5th or 10th credit card they can’t afford?

I guess the only thing that matters is economic choice and competition. And if consumers get screwed by banks, it’s the fault of the consumers, not the banks’. That’s Republican KoolAid.

It’s also bullshit. More than that, I consider it immoral. And if Hensarling can’t put his constituents’ needs ahead of the desires of banks and insurance companies, he should resign in favor of someone who will.

4 replies »

  1. The chairman is correct. The cfpb is completely unaccountable to Congress, the president and it ignores the courts. Most of their rules and regulations were finalized in violation of Dodd Frank. The Act required the agency to have a senate confirmed director before it could stand up. The director received a recess appt before being confirmed. Therefore, those rules are illegal.

    • No, neither Hensarling nor you are correct. The link above goes to the Consumer Federation of America’s description of the CFPB’s accountability (although the link was busted and has been fixed). Examples of the CFPB’s accountability are:

      • The Director of the CFPB is appointed by the President and may be removed by the President
      • The Director has to testify before both houses of Congress twice a year.
      • The GAO audits the CFPB’s finances every year and submits the results of that audit to Congress and the President.
      • Regulations issued by and enforcement actions initiated by the CFPB are subject to judicial review
      • The Financial Stability Oversight Council can overrule the CFPB’s regulations. The FSOC has the Secretary of the Treasury, the Chairwoman of the Federal Reserve, and others as voting members.

      And a host of other limitations as well. Then Deputy Secretary of the Treasury Neal S. Wolin wrote about the CFPB’s accountability on the Treasury website in 2011.

      As far as the legality of the regulations given the Director was given a recess appointment, they were challenged in court and lost, and they only applied to the actions Director Cordray took between 2011 and 2013, when he was a recess appointment. Cordray was confirmed by the Senate in 2013, and upon his confirmation he re-affirmed all the regulations as a “just-in-case” measure. So you’re wrong there as well.

  2. notwithstanding marc’s silly comment (anything republicans don’t like is illegal or unconstitutional, anything they do like voter suppression or inserting religion into the constitution is), there are issues with the cfpb. the biggest problem is that financial services pro’s can innovate faster than regulators can regulate. the cfpb is always playing catch up. like when it slapped a fine on citi for it’s trading losses. if losing 6 bil didn’t teach citi a lesson, not sure a million dollar fine will do the trick. however, cfpb has created a credit crunch and caused some banks to leave the market. you could argue that’s good if you want to, but it has affected homeowner (and small business) access to capital. yes, there are many reasons some homeowners can’t get loans and bad jobs etc is part of it, but so is regulation.

    nonetheless the statement by hensarling is either deliberately or accidentally deceptive. of course the best governor is competition and transparent markets. but when, if ever, has financial services been transparent?

    • I know someone who is a VP at a smallish bank, and he agrees with you that some small banks have been driven out and there is less access to credit. And he has said that the CFPB’s regulations are pretty onerous for small banks and he’d like to see some changes there. After all, regulations written for Wells Fargo or Citibank – banks that are so large that their failure could seriously disrupt the national or global economy – are not necessary for small banks that might affect a few thousand depositors in one community.

      However, he’s also seen some details on failed banks and most of them failed for reasons that had nothing to do with regulations – poor management, being radically undercapitalized, failing to follow the laws against things like money laundering, and the like. So the “regulations are driving banks out of business” argument made by Marc and others are not based in facts.

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