Latest Online Edition  Read Here

What Went Wrong Featured

A few weeks ago, a former aide to Barney Frank penned an op-ed titled "What Went Wrong with the CFPB." I'll tell you what went wrong. First, the CFPB is not a regulator. It's a genie granting the wishes of consumer advocates. If it was a regulator, it would use a variety of tools. Instead, all it has is a sledge hammer. And when the only tool you have it a sledge hammer, the whole world is something to destroy. This winds up serving nobody. Take the aborted arbitration ban. The CFPB could have passed a rule that said it had the authority to take away a firm's right to use arbitration clauses for a period of time. This would have been an effective tool in cases like the Equifax breach. But the Bureau opted for a power grab and now is powerless.  Second, the CFPB flunked Econ 101. The Bureau set itself up so that its employees would be paid more than the average regulator. The idea was this would entice staff to stay rather than leave through the revolving door like the rest of D.C. However, because the CFPB made itself the atomic bombs of financial regulation, private firms upped their salaries. To further the analogy, they built hydrogen bombs in response. Non-competes would have been the better solution. Finally, the CFPB was too political. There was no avoiding this once Elizabeth Warren started scheming. This created two problems. One is of motivation. There was always reason for Richard Cordray to act in the most political way possible and gain favor with trial lawyers who would later become donors to his campaign for Ohio's governor. In a bit of irony, Cordray was banned from participating in the Jeopardy tournament of champions due to Ohio's strict campaign laws. There should be a ban on directors running for office for at least two years after leaving their positions.  The other problem is culture. Not everybody left the CFPB for a higher paying job. Some took salary cuts to leave. They went back to their old jobs at other agencies because they couldn't take the cult-like atmosphere.  Trying to fix these problems is like trying to fix a hole in the hull of a submarine under water.
More in this category: « Now You Know Tax Wins »

Ted Craig

  • Boxed In
    A recent story in the WSJ details how GM wants to use carbon fiber in its pick-up trucks. Carbon fiber offers the strength of steel with the fuel-saving benefits of…
  • Maybe They're Just Jerks
    A few years ago, a female producer said many men in Hollywood view themselves like this. In reality, they're probably more like this. The recent focus on sexual harassment might…
  • Tax Wins
    The tax bill, as it stands now, seems pretty good for dealers. It keeps the floor plan interest deduction, thanks to Rand Paul. It allows credit unions to continue pretending…
  • What Went Wrong
    A few weeks ago, a former aide to Barney Frank penned an op-ed titled "What Went Wrong with the CFPB." I'll tell you what went wrong. First, the CFPB is…
  • Now You Know
    Education is seen as the answer for everything. The CFPB considers financial literacy the solution to consumers' problems. After the clashes in Charlottesville, there were calls for educating people to…
  • Kinda Disappointed
    It seems the situation concerning CFPB leadership is moving toward a quick resolution, with Leander English unable to stay in the director's office. For a while, I had visions of…
  • Situation Normal
    Starting in 1378, the Catholic Church had two popes. Urban VI was seated in Rome, Clement VII in Avignon, France. Apparently, somebody skipped over the part about two masters. The…
  • Bad News
    The other day, I wrote about the poor coverage of auto sales in the Wall Street Journal. Then, on Friday, I saw another junk article, this one about general retail…
  • No Solutions
    The older I get, the more I'm convinced people don't want solutions. They don't want their problems, but there is a difference between that and solutions. Solutions are hard. They…
  • No, They Didn't
    Yesterday's WSJ had an article on plans by Mahindra & Mahindra to start selling vehicles in the U.S. There was no mention that we've seen this show before and it…