CFPB Exceeds its Authority Again
Guest Blog: Natalie Wyman
The Consumer Financial Protection Bureau (CFPB) was created by Dodd-Frank in 2010 as a federal agency that would protect consumers by imposing regulations on businesses and banks. However, the CFPB has proven itself to be the one in need of accountability; its structure does not allow it to be easily controlled. This is highlighted by the trouble that the CFPB has gotten into recently for testing the limits of its authority when it comes to civil investigative demands (CID).
J.G. Wentworth, LLC and the CFPB have been going back and forth over the CFPB’s jurisdiction to issue a CID for the company’s structured settlement and annuity payment purchasing activities. In a petition against the demand, J.G. Wentworth, LLC maintained that these purchasing systems could not be classified as a consumer financial product and therefore were outside of the CFPB’s jurisdiction. The CFPB threw J.G. Wentworth’s petition out.
Earlier this year, U.S. District Judge Richard J. Leon ruled that the CFPB had overstepped its bounds when issuing a CID to the Accrediting Council for Independent Colleges and Schools. He wrote, “Although it is understandable that new agencies like the CFPB will struggle to establish the exact parameters of their authority, they must be especially prudent before choosing to plow headlong into fields not clearly ceded to them by Congress.”
Judge Leon hits the nail on the head: instead of restraining itself and showing prudence, the CFPB is testing the limits of its jurisdiction, highlighting its complete lack of congressional accountability.
This is why reforming the CFPB and the intrusive Dodd-Frank regulations is incredibly important. The CFPB needs more oversight and accountability to ensure that it is not allowed to run rampant. The Financial CHOICE Act would restructure the CFPB to create further congressional accountability, something that these CFPB jurisdiction fights have proven is absolutely necessary.