Political Animal


July 09, 2012 9:14 AM Beating the Devil At His Own Game

By Ed Kilgore

Most progressives think of the new Consumer Financial Protection Bureau, if they think of it at all, as a small consolation prize in a larger lost war with the financial services industry; as the legacy of consumer champion Elizabeth Warren, once the CFPB’s intended director and now a Senate candidate; or as the largely symbolic target of conservative and Wall Street rage at the belief that more, not less, regulation is essential to America’s economic future.

But as John Gravois explains in the July/August issue of the Washington Monthly (available in a Sneak Preview today), the CFPB is an institution well worth the political capital the president spent on the recess appointment of its director, former Ohio attorney general Richard Cordray, and well worth a robust progressive defense against GOP efforts to defund or “defang” it. Well-designed, well-staffed, and very aggressive in its start-up efforts, the CFPB aims at changing the dynamics of the financial industry—or at second best, exposing and therefore reducing its predatory tendencies—by thoroughly understanding its use of behavioral economics, data-mining, and other “twenty-first century” strategies that have wreaked havoc on consumers and ultimately the U.S. economy.

Moreover, says Gravoir, the new agency’s DNA is highly resistant to the most effective tactic usually deployed against regulators by the regulated: conquest from within.

The bureau,” says the Harvard political scientist Daniel Carpenter, “is probably the first modern agency designed from the ground up with an eye to preventing regulatory capture and preserving autonomy.”

But CFPB’s efforts to beat the devil at his own game in order to build a financial services industry that competes on the basis of right instead of wrong values does involve acceptance of an awful lot of fire and brimstone:

Throughout the debate over financial reform—and for much longer than that, really—there have been people who believe we should craft sophisticated regulations tailored to the heavily engineered financial system we have; and then there have been those who believe we need to break up that system, shatter the behemoths into smaller pieces, and bring finance back down to human scale. The CFPB does little to satisfy those in the second camp.

It’s all the more reason that all progressives should watch the initial efforts of the CFPB—and the efforts of the one-time Masters of the Universe and their political toadies to neuter it—very carefully. Any way you look at it, the bureau’s success or failure will open a new chapter in an old story.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.


  • c u n d gulag on July 09, 2012 9:47 AM:

    Let Romney and the R's win Congress in November, and see how fast they undermine the CFPB, or, instaed, just grab it, and drown it in the nearest bathtub.

    It will take another Obama administration for CFPB to establish itself well enough for people to recognize that it's helping, and that keeping it around is worthwhile, despite the Corporatist's and their well-paid right-wing propaganda Wurlitzers endless, desperate, and increasingly louder and angrier attempts to sway the public's opinion, which will allow them to get the votes in Congress to kill the CFPB with as much extreme prejudice as their money and power can buy.

  • DAY on July 09, 2012 10:24 AM:

    I have long been a "localvore"- support farmers markets, the one man plumber/electrician, etc.
    And those goes for banking as well. There are still plenty of locally owned community banks. Where the president also coaches Little League.

  • David Carlton on July 09, 2012 10:45 AM:

    Ed, I'm a bit confused by this post. Are you suggesting that "those who believe we need to break up that system, shatter the behemoths into smaller pieces, and bring finance back down to human scale" are somehow in cahoots with the efforts of the one-time Masters of the Universe and their toadies to neuter the CFPB? I personally think locavores in banking are a bit silly; the Golden Age of radically decentralized banking required massive regulation and last-resort lending to make it work, and those warm-and-fuzzy community banks were as prone to sell their mortgage portfolios to Wall Street as anyone else. They also could be remarkably unsophisticaated about finance; a banker friend of mine has some really funny stories about the credulity of some of his colleagues over Wall Street "financial innovations." But supporters of a decentralized system are no friends of the Masters.

  • Robert nagle on July 09, 2012 11:26 AM:

    I wanted to add something easily overlooked. I had a dispute regarding a credit card account, and recently filed a dispute through the CFPB http://www.consumerfinance.gov/complaint/ The credit card refused to help me even after several attempts. I got almost immediate action by both the credit card company and CFPB. So the CFPB has shown immediate benefits to me.

  • schtick on July 09, 2012 12:37 PM:

    The tealiban hates anything that promotes fairness and results in helping the middle class and poor.

  • Doug on July 09, 2012 7:22 PM:

    As a progressive, I fail to see how having the CFPB prevents any further reigning in of the Wall Street kleptocracy. In fact, the more publicity the Bureau provides to the public about HOW those vultures operate, the easier it will be to cut them down to size.
    Which, undoubtedly, is why said vultures are so frightened by the CFPB...