This is Unbelievably Aggravating

From today's WSJ:

A House subcommittee will hold an "oversight" hearing today on the new Consumer Financial Protection Bureau, the ├╝ber-regulator that will soon have jurisdiction over most of the country's credit-making institutions. We put "oversight" in quotes because Congress has little say over either the new bureau or its unofficial czar, Elizabeth Warren.

This unprecedented lack of accountability is by Ms. Warren's design. The bureau was the Harvard professor's idea, and she lobbied the Obama Administration and Congress to make it part of the 2010 Dodd-Frank financial reform. That law calls it an "independent bureau," akin to an independent agency like the Securities and Exchange Commission. But that's deceptive. Unlike other agencies, it isn't subject to annual Congressional appropriations.

Incredibly, the law says the bureau's director gets to set her own annual budget by requesting a share of the "combined earnings of the Federal Reserve System." The total she can request is capped this year at 10% of the Fed's total operating expenses (which in 2009 were $5.4 billion). That cap rises to 11% next year and 12% in 2013, and the Fed Chairman has no authority to deny her request. The director can also request an additional $200 million more per year for the next five years from Congress.

This arrangement may be unconstitutional under the separation of powers, and we hope it is soon tested in court. It was a deliberate political gambit to make the bureau less accountable to either Congress or the rest of the executive branch. In July, when its powers fully vest, the bureau will have supervisory authority over banks with more than $10 billion of assets and independent rule-making authority.

Both are cause for worry, given that the bureau will not have to incorporate the views of other banking regulators into its rules when it comes, for instance, to issues of safety and soundness. While the IRS Commissioner and Comptroller of the Currency report to the Treasury Secretary, Ms. Warren and her successors can tell him to crush rocks.

The affront is compounded by President Obama's decision to evade the spirit of the law by letting Ms. Warren set up the bureau without Senate confirmation. Republicans objected to her potential appointment, and even Democrat Chris Dodd said she would be hard to confirm. So Mr. Obama created a special position for her at both the White House and Treasury, letting her essentially create the bureau and hire its staff without facing the Senate. She has proceeded to sign up a raft of liberal antibank populists, such as former Ohio Attorney General Richard Cordray, former AFL-CIO deputy counsel David Silbermann and University of Connecticut law professor Patricia McCoy

Imposing accountability on public officials is hard enough without laws being structured to purposely evade it.


  1. Noah:

    What else would you expect from President Vacation?

  2. Rick Caird:

    Obama is a devotee of government by thuggery.

  3. perlhaqr:

    Soap box, ballot box, jury box, cartridge box.

    And they just squashed the jury box option.

    What was that Kennedy quote? Ah yes: "Those who make peaceful revolution impossible will make violent revolution inevitable."

  4. Noumenon:

    On the other hand, accountability for bankers is also almost impossible to get, but it's still more like two wrongs than a right.

  5. Daublin:

    The scale is staggering. 1 billion a year just for analysis and advice? 10% of the budget of the actual Fed, just for a political favor?

  6. Hasdrubal:

    Accountability for bankers is pretty easy to get. Stop bailing them out and their stakeholders will start holding them accountable. Just like any other businessman.

  7. Don:

    The idea that all these unbelievably destructive schemes are simple ignorance of economics just doesn't hold water. This HAS to be a coordinated effort.

    Dr. Evil couldn't have worked up a better scheme.

    Why do I hear the theme from Despicable Me and giggling minions in my head while I read this?