In President Obama’s recent address to the nation, he pledged to cut costly regulations to help promote economic growth. Of course, Obama had no intention of reducing government red tape. That is why he continues to demand the installation of a new regulator – Richard Cordray – to head the powerful Consumer Financial Protection Bureau (CFPB).
The CFPB was created by the Dodd-Franks financial reform bill. Sen. Dodd described the Bureau as a regulatory agency “one like we have never seen before.” The Bureau was given huge power to regulate much of the economy at the whims of its Director with little or no checks and balances from Congress.
Today at a Senate Banking Committee hearing we got a glimpse into some of the new regulations. The hearing’s made it clear that should Cordray be confirmed, his first regulatory target will be the consumer lending industry, often called “payday” lending.
One of the advocates of new regulations was Doug Fecher, the CEO of the Wright-Patterson Federal Credit Union. Fecher used the hearing as an opportunity to gain competitive advantage over his competitors. Calling for the confirmation of Cordray, he pushed government restrictions on payday lending. Of course, his credit union offers its own version of a payday loan, known as a “stretch loan,” that would be allowed under the proposed regulatory scheme. And he also could, out of his own volition, use the option of clearing off the loan through debt charity from his union. In other words, regulation would benefit Fecher and destroy his competitors.
Such is our future if the CFPB is allowed to regulate the economy. Just as President Obama’s “venture socialism” allows the government to pick corporate winners and losers, the CFPB will do the same through regulations. Established companies like credit unions and big banks will drive small business competitors out of business thanks to “consumer protection” regulations.
The president never had any intention of cutting wasteful regulations and the only thing preventing a new round of costly government intervention in the marketplace is Senate Republican’s promise to filibuster Cordray’s nomination should it to the floor of the Senate.