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Tuesday, February 28, 2012

CFPB Will Take $548 Million From Fed; Up 27%

This is what happens when Washington passes a poorly conceived reactionary law like Dodd-Frank. As one tiny part of the law, the CFPB was created. This agency is accountable to no one, has an unlimited budget which cannot be denied by Congress and has an acting head in Richard Cordray who is acting illegally via recess appointment even though the Senate was never in recess. And as financial analyst Tom Brown notes, he alone will decide how much taxpayer money to spend.

Did you see that CFPB head Richard Cordray went before a House panel last week and said he’s planning to boost his agency’s budget by 27% this year? He didn’t bother to actually ask Congress for the extra money, or even lobby for it. He simply announced that his agency will spend $448 million, whether anyone liked it or not. I’m not sure this is what the Founders had in mind when they came up with the idea of Congress having the exclusive power of the purse. Oh, well.

The CFPB can get away with stunts like Cordray’s because, unlike every other federal regulatory agency, it’s funded not via Congressional appropriation or subject to rigorous oversight. Instead, the agency has its own in-house money spigot, called the Federal Reserve. According to the Dodd-Frank Act, which authorized the agency, the CFPB can allocate itself up to $548 million from the Fed this year, and then $598 million next year. By law, the Fed can’t turn down the request. Congress plays no role in the process.

Oh, any as Brown also explains, all this does is raise the cost of credit for Americans. This agency is a complete abomination and yet no one can stop it, despite the clear and overt unconstitutionality.