By George Will
Friday, October 14, 2016
Another small step was taken last week on the steep and
winding ascent back to constitutional norms. The U.S. Court of Appeals for the
D.C. Circuit, the nation’s second-most important court, did its judicial duty
by reprimanding Congress for abandoning constitutional propriety.
The court declared unconstitutional the unprecedented
independence that Congress had conferred on the Consumer Financial Protection
Bureau. This legal skirmish about one aspect of this one tentacle of the
administrative state may seem recondite and trivial. It concerns, however, two
momentous matters. One is the integrity of the federal government’s Madisonian
architecture. The other is something that not even the prescient James Madison
could have anticipated: Congress’s modern eagerness to diminish itself.
The CFPB is empowered to “regulate the offering and
provision of consumer financial products or services.” Being able to define
“financial products,” it can regulate almost everything touching finance, from
mortgages to financial advisers to retirement plans — even car loans, although
it is expressly forbidden to do so. Acting like a freewheeling little
legislature, it concocts laws as it improvises standards. It is authorized to
“declare,” with scant congressional guidance, certain business practices “abusive,”
“unfair,” “deceptive” or involving “discrimination.” It does so by whatever
criteria it pleases, and imposes penalties it deems appropriate.
Until the court’s decision last week, the CFPB, unlike
any federal institution created since 1789, was uniquely sovereign: Its
director was appointed by the president for a five-year term — longer than the
president’s — and the director could be removed by the president only “for
cause.” That is, only for “inefficiency, neglect of duty or malfeasance,” not for
reasons of policy.
The court held that the CFPB is “unconstitutionally
structured” because of its “novel agency structure.” There are several agencies
that are controlled by bipartisan commissioners who can be only removed for
cause, and they are described as “independent” agencies as a result. But they
all have five members, chosen from both parties. The court has just held,
however, that as created by Congress in the 2010 slapdash Dodd-Frank
legislation, the CFPB’s single director “enjoys more unilateral authority than
any other officer in any of the three branches of the U.S. government, other
than the president.”
The court’s ruling makes the director subject to
presidential control through dismissal. Another important challenge to the
CFPB’s operations, currently in a federal district court, concerns Congress’s
voluntary abandonment of its power of the purse: Dodd-Frank, which was passed
with the support of only three House Republicans and three Republican senators,
says the CFPB’s funding shall be “determined by the director” and shall come
not from congressional appropriations but from the Federal Reserve. Small
wonder it spends lavishly on itself. Sen. Elizabeth Warren (D-Mass.), who while
at Harvard Law School proposed the CFPB, insists it is “highly accountable” to
Congress. The CFPB disagrees, having proclaimed that its funding from outside
the appropriations process gives it “full independence” from Congress. When a
member of the House Financial Services Committee asked CFPB Director Richard Cordray
about his agency spending $215 million refurbishing a building with an assessed
valuation of $150 million, he, oozing disdain, dismissed the question: “Why
does that matter to you?” Perhaps he should be forgiven for assuming that CFPB
spending government money is none of Congress’s business, given that Congress
has effectively said exactly that.
Although Madison assumed that the government’s rival
institutions would jealously defend their powers, he worried that the
legislative branch would threaten the equilibrium of the checks and balances by
“drawing all power into its impetuous vortex.” Today, however, Congress is
centrifugal rather than centripetal, expelling rather than concentrating power.
A peculiarity of today’s politics is the disproportion
between Democrats’ fervent desires to serve in Congress and their lackadaisical
willingness to cede its powers. Democratic candidates, both incumbents and
challengers, are fighting ferociously to remain on, or get to, Capitol Hill.
One wonders: Why?
Their party is doctrinally devoted to marginalizing the
legislative branch in order to expand the discretion of the administrative
state as an instrument of executive power.
And the next president certainly will be impatient with
Madison’s separation of powers. President Hillary Clinton would be because
progressives since Woodrow Wilson have considered this system an anachronistic
impediment to energetic government powered by an unconstrained executive.
President Donald Trump would be anti-Madisonian because the system of checks
and balances would impede the sweep of his unmediated fabulousness.
The CFPB’s progressive authoritarianism reflects, in the
language of the Hudson Institute’s Christopher DeMuth , “regulatory
insouciance” made possible by “legislative abnegation.” Both will continue
until conservatism reappears.
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