Richard Cordray's resignation as director of the Consumer Financial Protection Bureau provides a great opportunity for President Trump to appoint a new director who can undo an unfortunate legacy of bureaucratic overreach and political bias. More important going forward is what we have learned from our experience with the CFPB to prevent future similar missteps.
The first lesson is that Congress should never again create an "independent" agency with a sole director, particularly one not subject to the congressional appropriations process. Under the law, the CFPB - unlike the Securities and Exchange Commission, the Federal Communications Commission, the Federal Trade Commission and other independent agencies - is funded by the Federal Reserve, a move specifically designed to avoid congressional oversight.
I had the privilege of working as an aide to then-Rep. Barney Frank, chairman of the House Financial Services Committee when the Dodd-Frank Act of 2010, which created the CFPB, was written. I realized that no bill is ever perfect and the CFPB would have its imperfections. The authors wanted the bureau to be a fair arbiter of protecting consumers, instead of what it has become - a politically biased regulatory dictator and a political steppingstone for its sole director, who is now expected to run for governor of Ohio.
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