In a Fortune op-ed, “How the CFPB fight is a sign of the next financial crisis,” Michael Barr and Joe Valenti (director of consumer finance at the Center for American Progress) describe how the current legal battle over who is the rightful director of the Consumer Financial Protection Bureau (CFPB) is indicative of a larger shift in the federal government’s approach to financial regulation: deregulation.
“By and large,” they write, “the steps taken post-crisis are working. Credit card customers have seen costs go down... Banks are as profitable as ever, and the Dow is at record highs.” And yet, they argue, “the Trump administration and many congressional Republicans seem all too eager to return back to the days when government turned a blind eye to recklessness in the private sector, which could sow the seeds of the next financial crisis.”
When Richard Cordray stepped down as director of the CFPB, his deputy, Leandra English, became acting director – but this was contested as President Donald Trump appointed his Office of Management and Budget (OMB) director, Mick Mulvaney, to fill that role. Barr and Valenti argue that the appointment of Mulvaney continues a trend of Trump administration officials stepping into regulatory roles in an effort to roll back federal oversight of the financial industry.
While acknowledging that unanticipated concerns can emerge from any new law, they call on the House and Senate to alter Dodd-Frank’s rules “with a scalpel, not dynamite.”
“It’s not too late to turn this car around before it plunges off the cliff,” they say, pointing to opportunities for bipartisan measures to streamline reporting requirements, create tailored rules for community banks, and more.
--By Jackson Voss (MPP '18)