During the Great Recession of 2007-09, the net worth of U.S. households fell by $14 trillion. Approximately 4.5 million American jobs were lost in a six-month period. Lehman Brothers, the country’s fourth-largest investment bank, went defunct after 158 years in business.
The list could go on and on, but those who lived through it don’t need additional reminders of the impact from the largest financial crisis since the Great Depression. Yet there is, apparently, a need for reminders that Congress responded to the calamity with the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Almost from the moment the legislation was enacted in 2010, Republicans in Congress have attempted to undermine it — particularly the Consumer Financial Protection Bureau that was created through the law. Those lawmakers found a kindred spirit in Donald Trump, who as president signed legislation that limited regulations on auto lending and exempted dozens of banks from oversight provisions.
Now, the 5th U.S. Circuit Court of Appeals has ruled that the Consumer Financial Protection Bureau is unconstitutional and must be stripped of its authority. The bureau, the brainchild of now-Sen. Elizabeth Warren, D-Mass., who served as its first director before being elected to office, is charged with protecting consumers from predatory activity by lenders and other financial services.
In one example, the bureau this year fined U.S. Bank $37.5 million for illegally accessing customers’ credit reports and opening checking accounts, savings accounts, credit cards and lines of credit without customers’ permission. In another example, the bureau in 2016 fined Wells Fargo $185 million for opening accounts without customers’ knowledge.
“We all must do more to hold lawbreaking companies accountable when they abuse and misuse our sensitive personal data,” bureau Director Rohit Chopra said this year.
The Consumer Financial Protection Bureau was created with the express purpose of avoiding annual congressional battles over funding for the agency. The Dodd-Frank legislation states that the Federal Reserve shall transfer up to 12 percent of its “total operating expenses” to the bureau each year, upon the CFPB’s request.
Legal scholar Ian Millhiser writes for Vox.com: “The decision … relies on a novel reading of an obscure provision of the Constitution, and is entirely at odds with a Supreme Court decision that rejects the Fifth Circuit’s reading of that provision.”
The three appeals court judges who rendered the decision are Trump appointees. In the decision, Judge Cory Wilson admits that “every court to consider” the arguments presented in the case found the bureau to be “constitutionally sound.” Presuming that an appeal lands the issue in front of the Supreme Court, it appears unlikely that the 5th Circuit’s decision will stand — although there is no telling with a conservative majority on the nation’s highest court.
But the point is not to argue the ideological leanings of federal courts. It is to question why conservative lawmakers and judges are so intent on working against the interests of the public.
The Consumer Financial Protection Bureau was created to protect average citizens and their neighbors against predatory behavior by the rich and powerful. It was created to prevent another financial meltdown fomented by would-be oligarchs, and it has effectively filled that role.
Congress should work to empower the bureau, lest we ignore the lessons of the Great Recession.
