Guardrails on a Two-Way Street

The Washington Post recently made waves when its owner announced that the paper’s opinion section would focus on issues related to personal liberties and the free market. Which raises the question: why a full-throated – and inaccurate – defense of the Consumer Financial Protection Bureau, which at times has taken a jaundiced view of the issues on which the Post is newly refocused? 

In its editorial, “Why Americans need the CFPB” the Post argues that removing the Bureau’s consumer protection “guardrails” is the goal of “its detractors.” This is a misrepresentation and fails to acknowledge several key points. 

First, the financial services industry – with or without the CFPB – is highly and well-regulated at both the federal and state levels. The notion that there are no guardrails or that somehow the financial services space will devolve into the Wild West with no sheriff in town simply isn’t correct. 

Second, for years the Bureau has operated with no clear guardrails, little transparency and even less oversight or accountability. The recent calls to reform the CFPB have not entailed removal of “guardrails,” but the opposite: the placement of appropriate guardrails that the CFPD desperately needs if it is to fulfill its role. Under its former leadership, the CFPB rarely followed standard rulemaking to set clear rules, instead using enforcement actions or pronouncements via press release to establish policies. It failed to protect consumer data from a serious breach with no accountability, while also seeking from industries it regulates large swaths of customer data that had nothing to do with its mission of protecting consumers.

Third, while there may be some voices out there seeking a full dismantlement of the CFPB, citing redundancy of its work or extreme regulatory over-reach in its actions, there is consensus that protecting consumers and holding bad actors to account is important. But accountability should be a two-way street.