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CFPB Oversight Compared with Other Regulators

posted by Adam Levitin
A lot of the debate at today's Government Oversight hearing on the CFPB dealt with whether the CFPB was the most accountable or the least accountable federal government agency ever. My position has been that compared with other federal financial regulators, the CFPB is remarkably accountable. But accountability comes in many different ways and forms. I've tried to summarize comparative accountability visually in the chart below. It compares the oversight mechanisms that apply to the CFPB with some other agencies: the Environmental Protection Agency, the FDIC, the Federal Reserve Board, the FTC, the Office of Comptroller of the Currency and Office of Thrift Supervision, the SEC, and the Social Security Administration. 
Oversight Comparison
Now not all forms of oversight are equal. A GAO audit isn't the same as Presidential removal power, for example. Nonetheless, the chart (available as a better quality PDF here) shows that the CFPB is subject to an extensive battery of oversight mechanisms--more than any of the other financial regulators included in the comparison.
At the very least, this chart provides pretty good evidence that claims that the CFPB is the least accountable agency ever just don't hold water, and that it is at least as accountable as the existing bank regulators. 
Also, please note that the question of OCC and OTS removal power has not been resolved.  There are some OLC opinion letters that touch on the issue, but OLC has not opined on the matter directly and, in any case, the OLC's opinion is not the law. I would note that the National Bank Act of 1863 places restrictions on the ability of the Treasury Secretary to tell the Comptroller to take or refrain from action. The Treasury Secretary serves at the pleasure of the President, so if the President could simply remove the Comptroller, the restrictions on the Treasury Secretary's actions would be a nullity. 
Let me emphasize that I'm not expert on all of these agencies, so I might have missed some points on the comparison chart. If so, please pipe in in the comments. Also, if you think there are other instructive comparison agencies, please say so and I'll revise.  


I'm starting to think that Prof. Elizabeth Warren should hand off the role of Head of CFPB to her deputy (whoever that is) and be recess-appointed to head the OCC.

I'm not sure how this would be integrated into the chart, but I think that it is important to note that the FTC has additional, unique rulemaking requirements. As opposed to normal APA rulemaking,the FTC is generally required to adhere to a separate rulemaking process that was imposed under the Magnuson-Moss Act (with some very limited carve-out areas where they have been given APA rulemaking power). Some FTC officials and consumer advocates have criticized these procedures as unduly onerous, and point to the fact that no rule has been passed under these procedures for 30+ years.

It seems notable that the only two agencies on the chart that have an express mission of consumer protection both have significant additional restraints on their ability to regulate. And in terms of not all restraints being equal -- the Manguson-Moss requirements appear to be a pretty drastic restraint.

Colin H,

I thought about including Mag-Moss, but I'm not really sure it makes sense to include. It's not so much oversight as a functional prohibition on rule-making. As you note, the FTC doesn't do rule-makings under Mag-Moss any more because it's just too cumbersome. Instead, it sets policy via litigation and settlements. That's frankly a crappy way to do things. By making rule-making too hard, we've ended up with a process that (1) is subject to less protections (and less Congressional review ultimately) and (2) results in less clear law.

What was astounding to me at the hearing was that Todd Zywicki argued for just giving FTC broader authority as if that would fix everything. Todd failed to mention that the FTC is very constrained in its ability to do rule-making. Which, I suspect is exactly what Todd wants. Give all the authority to an agency that can't do very much except for individual enforcement actions and has to worry about being choked by Congress in the appropriations process. I didn't have a chance to point this out (or to point out that the studies of the impact of the CARD Act are that it didn't have much effect on the cost of credit, contra David Evans' claims).

What is astounding to me is that you are astounded by anything that Todd Zywicki says.

What he says is ridiculous, but that has been for a long time. I say you should cease to be astounded that a pig oinks and that a dog barks.

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