Many years ago, we, as a Nation, revolted against a King. It seems we may have as close as you can get to an omnipotent ruler in the form of the CFPB, and its Director, Richard Cordray (CFPB Hearings).
For the most part, the CFPB answers to no one while carrying out what they decide to be their duties in enforcing laws which protect the consumer.
The CFPB determines “what is a potential violation”, “how and when to investigate” and “who is accountable”. All of this is handled within the organization with no outside guidance or oversight.
They have become the police, judge, jury, and executioner. Once the CFPB completes their audit and determines what they believe are to be violations, there is essentially no formal appeal process. It’s their way or the highway.
Even if a lender decided to fight it out in court, they are somewhat disadvantaged as Dodd-Frank requires courts to grant CFPB deference regarding the CFPB’s interpretation of federal consumer laws.
The CFPB will always get the benefit of any doubt. That coupled with the fact that no lender in their right mind would take on the entity which singularly can destroy them. As the old saying goes, “Win the battle but [surely you will] lose the war”.
There are rumblings in Congress of some sort of oversight for CFPB in the form of an independent Inspector General. This individual would be appointed by the President and confirmed by the Senate. Not an ideal solution as that would still lend itself to partisan politics. Maybe that would be better than no formal oversight.
It may not seem like a big deal to some but ask those have been audited and penalized by the CFPB for their point of view. Was it a fair and equitable process or more of a kangaroo court?
It’s not a matter of if you’ll be audited; it’s just a matter of when. Are you prepared? Do you believe there should be better oversight with a formal appeal process to their findings and fines?
Can you sleep tight while CFPB is watching the store?