Wednesday, July 9, 2014

We Need A Taxpayer Financial Protection Bureau

One of the many foolish provisions of the Dodd-Frank legislation passed by the US Congress in 2010 and gleefully signed into law by President Obama was the establishment of a brand new Federal bureaucracy, the Consumer Financial Protection Bureau (CFPB) whose mission was to address issues that had nothing to do with the 2008-9 financial crisis (for more see Surely, You Must Be Joking)

What's the first thing a new Federal bureaucracy needs?  A new headquarters building, of course!  So the CFPB budgeted $95 million for renovations on the building it was taking over in downtown Washington DC from the Office of Thrift Supervision (another Federal bureaucracy dissolved by Dodd-Frank).  A new agency could not reasonably be asked to take over intact and "as is" a building soiled by the presence of another agency and thus an extensive renovation was required.

For what happened next let's turn to the recent report of the Inspector General (IG) for the Board of Governors charged with oversight of the CFPB (as reported by The Fiscal Times and you can find the full report here). 

In its letter of June 30, 2014 the IG concludes:

- The scope of renovations has expanded and will now cost $215 million instead of $95 million.

- Although required by the CFPB's own internal guidance "a sound business case is not available to support the funding of the renovation".

- It was "unable to locate any documentation of the decision to fully renovate the building".

- The CFPB's own Investment Review Board "approved the business case for the building renovation in September 2013 even though it was incomplete".

In response, a CFPB spokesperson stated "Our priority is attending to the People's Business (TM) and to prevent the ongoing pillaging by our nation's financial services industry.  We were in the midst of developing and issuing over a thousand pages of new regulations defining the new mortgage disclosure form designed to protect homeowners and to clarify the confusing and deceptive mortgage disclosure requirements established by our predecessor federal agencies over the past thirty years which took a perfectly simple and understandable but unregulated form used for several decades and added layers of paperwork to it.  Our new form simplifies this process by ending informed complexity and numerous pages of information to . . .  oh, where was I?  Ah yes, the IG report is a distraction from this important business and is obviously driven by racism and the War on Women.  So there."  (satire alert, I think, on this paragraph)

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