Americans need protection from the Consumer Financial Protection Bureau
by Jeb Hensarling and Roger Williams
April 12, 2017
Few Americans are familiar with the Consumer Financial Protection Bureau, but it is the most powerful and least accountable Washington bureaucracy in history and a perfect example of the political left’s dangerous belief that the ends always justify the means.
While the agency has an important mission, it was purposefully designed by Democrats to evade checks and balances that apply to other regulatory agencies, including those responsible for consumer and investor protection. Its bizarre, unique and defective design is exactly why a panel of federal judges ruled that the CFPB is structurally unconstitutional.
In its present form, the agency is an affront to the Constitution, to checks and balances and to due process. This is why we support the Financial CHOICE Act, legislation that changes the CFPB from an unconstitutional agency of unelected bureaucrats into a constitutional and accountable civil enforcement agency that enforces consumer protection laws written by Congress.
The CFPB’s current director, Richard Cordray, recklessly ignores the due process protections that have been deeply rooted in our American legal system for centuries. This abuse may generate headlines, but it does not achieve justice. The Dodd-Frank Act grants him incredibly broad powers to regulate consumer credit products, yet Cordray continues to ignore the law and the intent of Congress by making end-runs around existing laws.
In the legal decision that declared the agency’s structure unconstitutional, the court found that Cordray unilaterally reinterpreted the law and then essentially created his own law after the fact. In addition, the court said Cordray ignored the statute of limitations to justify imposing a huge fine on an American business. This is an outrageous violation of due process rights.
Another example of the agency’s violation of due process relates to its use of “unfair, deceptive or abusive acts and practices,” or UDAAP, authority. Citing the largely undefined and amorphous UDAAP is CFPD’s go-to claim, leaving plenty of wiggle room for the director to decide what the law says and means. The agency could provide clarity by writing rules to define UDAAP further, but refuses. Thus, CFPD deprives legally operating businesses of the information they need to follow the law when developing new products and services that benefit consumers. Given that Cordray was already found to have ignored legal protections in order to impose a multi-million-dollar fine on a company, clearly this UDAAP authority is a legitimate cause of concern.
Republicans and Democrats agree that the laws on the books must be enforced. Where we disagree is over whether unelected bureaucrats should have the power to write new laws. As currently structured, the CFPD has virtually unlimited power to do just that — and is harming consumers with higher costs and less access to financial products and services as it does.
The changes we seek through the Financial CHOICE Act will truly make the CFPB the “cop on the beat” its supporters claim they want. Cops don’t write the laws; they investigate and enforce the laws — and they don’t serve as cop on the beat, judge, jury and Congress all rolled into one.
It would be far easier to secure criminal convictions if the Constitution didn’t require probable cause for warrants or protect Americans against unreasonable search and seizure, but few would argue that justice would be served. In the same way, the success of the CFPB must be judged both on how it protects consumers and on whether it follows the Constitution.
In this debate, we must also remember that true consumer protection puts power in the hands of consumers, not Washington bureaucrats. True consumer protection promotes competition and choice and ensures that consumers have access to transparent and innovative markets that are vigorously policed for fraud and deception. In fact, the Financial CHOICE Act contains the toughest penalties in history for those who commit financial fraud, insider trading and deception. Our plan toughens penalties — not out of some ideological or poll-driven war against “Wall Street” — but to better protect consumers, restore checks and balances, defend due process and strengthen our markets.
Dallas lawmaker wants Trump to say `You're fired` to consumer financial protection bureau head
April 5, 2017
WASHINGTON — Rep. Jeb Hensarling wants President Donald Trump to direct his signature catchphrase at Richard Cordray, the director of the Consumer Financial Protection Bureau: "You're fired."
The Dallas Republican revived his long-running feud with Cordray in a combative hearing he chaired Tuesday in the House financial services committee, kicking off a series of barbs from GOP critics of the agency.
"For conducting unlawful activities, abusing his authority and denying market participants due process, Richard Cordray should be dismissed by our President," Hensarling said.
Hensarling did not stop at Cordray, adding that the entire agency should be eliminated, too.
DALLAS – President Donald Trump's speech to a joint session of Congress on Tuesday night appears to have won over many uncertain Republicans in this state while Democrats said they are waiting to see details of his proposals.
The Texas delegation to the U.S. House, from right to left
February 28, 2017
In the 114th Congress (2015-16), the Texas delegation’s roll-call voting behavior once again demonstrated that Texas Republicans are, on average, notably more conservative than their fellow congressional Republicans. Likewise, Texas Democrats are on average notably more conservative than their fellow congressional Democrats. The data also reveal how the competitiveness of representatives’ congressional districts can influence their floor behavior. Separately, they show the quite different ideological profiles of two Texas Democrats considering 2018 U.S. Senate runs.
Why the Consumer Financial Protection Bureau has got to go
February 28, 2017
Dallas Congressman Jeb Hensarling makes an excellent case for getting rid of Dodd-Frank or at least dismantling a large chunk of it including the Consumer Financial Protection Bureau.
The 2,319 page Dodd-Frank Act was passed in July of 2010. In the last seven years, only 80 percent of it has been implemented because it was so complex and costly. There were some good things in Dodd-Frank, including a provision requiring publicly-traded corporations to ask their shareholders to vote on the level of executive pay for their top executives. The legislation attempted to get rid of too-big-to-fail banks, but there is consensus that it did not do that. The most contentious part of the legislation created the CFPB.
Drain the swamp? Dismantling Dodd-Frank is a good place to start
February 28, 2017
Financial regulatory reform is coming. Donald Trump campaigned on a pro-growth regulatory reform message, promising to drain the swamp and dismantle the Dodd-Frank Act.
Since entering the Oval Office, the president has reiterated this pledge, stating that his administration would "be cutting a lot out of Dodd-Frank,"" and issuing two executive orders to get the process going.
Now, House Financial Services Committee Chairman Jeb Hensarling, Texas Republican, is set to unveil a new version of his bill to replace large parts of Dodd-Frank. Still, it remains unclear exactly how this reform process will unfold.
Here are three actions that will help Congress and the president reduce cronyism and create a more equitable path to prosperity in the U.S.
Hensarling ready to make final term as House Financial Services chairman count
February 19, 2017
WASHINGTON — U.S. Rep. Jeb Hensarling has one more term left as House Financial Services chairman. With a Republican in the White House, he is ready to make it count.
The Dallas Republican is heading the GOP effort to gut Obama-era financial reforms as the head of the U.S. House Committee on Financial Services. And in a city where relationships mean everything, his best friends are two of the most powerful people in the government: Vice President Mike Pence and House Speaker Paul Ryan.
“I pick the best friends,” he said, smiling.
All three men share a passion for limited government, particularly in the American economy. And amid the early turbulence of the Trump era, this political trifecta is positioned to wield enormous influence over how money moves through the world economy.
Congress can defund Elizabeth Warren's unaccountable and unconstitutional CFPB.
The Obama presidency placed no greater burden on America’s growth potential than the avalanche of regulations that smother the U.S. economic system. The most destructive and dangerous of the new regulatory bureaucracies created by the Democrat-dominated 111th Congress is the Consumer Financial Protection Bureau.
In November the American people voted to give Republicans unified control over Congress and put Donald Trump in the White House because, in large part, we pledged to "drain the swamp" — that corrupt political culture prevailing in our nation's capital that enables elites to manipulate the levers of government to their advantage.
Changing business as usual in Washington is a tough fight. But we would be going the wrong way if Republicans were to lift the current ban on earmarks — those infamous provisos attached to spending bills that funnel taxpayer money to pet projects and parochial interests — as some have proposed.
Rep. Jeb Hensarling on financial reform: 'Dodd-Frank clogs the arteries of capitalism'
February 8, 2017
Texas Rep. Jeb Hensarling, who chairs the powerful House Financial Services Committee, is pushing his broad-brush redo of the 2010 Dodd-Frank law to Wall Street and his congressional colleagues.
The Texas Republican introduced his Financial Choice Act last year, which would eliminate a ban on certain investments, the Financial Stability Oversight Council's ability to label firms that pose risks to the wider financial system, and regulators' ability to intervene when banks fail. He's set to unveil an updated version as soon as this week.
The bill never made it to the floor last year, but it's likely to become the starting point for their efforts this year.
Conservative lawmakers banded together Tuesday to send a message to their Republican colleagues: Don’t bring back earmarks.
"If you start going down this road, you will lose the House of Representatives," Florida Rep. Ron DeSantis said at an anti-earmark event hosted by the Republican Study Committee.
"I never thought I’d have to be part of getting the earmark ban band back together," said Texas Rep. Jeb Hensarling, one of the Republican members who helped push for the earmark ban under former Speaker John A. Boehner.
Jeb Hensarling: How we can make the economy work for working people
November 17, 2016
By electing Donald Trump, the American people have sent a strong message: they are fed up with out-of-touch and out-of-reach Washington elites ruling their lives, and they're taking their government back for We the People.
This economy isn't working for working people. Americans have seen their paychecks stagnate and their savings decimated. Millions remain unemployed and underemployed in an economy that is not reaching its potential.
Dallas Rep. Jeb Hensarling seen as strong possible Trump pick for Treasury
November 18, 2016
WASHINGTON — In Congress, Jeb Hensarling has pushed an aggressive conservative agenda to scale back bank regulations, cut taxes, avoid bailouts, get the federal government out of the mortgage market, and make it harder for the nation's central bank to print money.
As Treasury secretary — the job he interviewed for at Trump Tower on Thursday — he'd have a megaphone on those issues. Reaction so far from fellow congressional Republicans and analysts has been positive.
This Congressman Could Turn the Dodd-Frank Financial Reforms Upside Down
November 15, 2016
Veteran Texas Congressman Jeb Hensarling has said that he doesn't expect to become Treasury secretary in a Donald Trump presidency. But as chairman of the House Financial Services Committee, he may wind up having almost as much influence. And that means the nation's economic future will be charted, in part, by a zealous deregulator, spending hawk, and unbending free-market crusader–one who will relentlessly prod the Trump administration to uproot the Obama era's sweeping financial reforms.
Hensarling is a longtime foe of Obama's landmark Dodd-Frank legislation, the 2010 legislation that, he claims, has strangled credit and hobbled America with years of zombie-like growth. The congressman is championing the Financial CHOICE Act, a radical measure that would scrap most of Dodd-Frank’s highly restrictive measures.
ATR: Rep. Hensarling’s Mission to Save the U.S. Economy
September 22, 2016, 10:02 AM
Last week the House Financial Services Committee approved H.R. 5983, the Financial Choice Act, to be considered by the House of Representatives. This sorely needed piece of legislation, introduced by the Chairman of the Financial Services Committee, Representative Jeb Hensarling (R-Texas), is the solution to the stagnant economic growth that the United States has experienced over the past several years. By undoing key provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, also known as Dodd-Frank, the Financial Choice Act will add much needed stability to our financial system.
Your Life: 10 things didn't know about Rep. Jeb Hensarling
September 5, 2016
Rep. Jeb Hensarling has served the fifth congressional district of Texas, which encompasses Anderson County, since 2003. He is a member of the Republican Party and currently chairs the House Financial Services Committee and has been a member and chairman of several other prestigious committees.
Hensarling was born in Stephenville and grew up working on his father's poultry farm near College Station.
He received a degree in economics from Texas A&M University in 1979 and a law degree from the University of Texas in 1982.
Before running for political office, Hensarling worked in the private business sector, serving as an officer for a successful investment firm, a data management company and an electric retail company.
Hensarling was first elected to Congress in 2002.
He has maintained a conservative voting record, voting against pro-choice legislation, stem cell research, same-sex marriage and hate crimes legislation. He has consistently supported free trade policies.
When not working in Washington, Jeb and his wife, Melissa, reside in Dallas with their two children.
We recently asked Hensarling to share 10 things that most people would not know about him.
You might be surprised by some of his responses.
My favorite band is the Beatles, and my favorite Beatle is George Harrison.
I once fought a bull in a Mexican bullring.
My favorite movie is Casablanca.
At TAMU, I lived around the corner from Texas singer/songwriters Lyle Lovett and Robert Earl Keen.
I still drive my grandfather's truck, a 1949 Chevy pickup. If you've been to the Dogwood Festival Parade, you've probably seen it.
I grew up on a poultry farm shoveling manure … which was good practice for my current job in Congress.
I get up at 6 just about every morning and go on a two-mile run before work.
My daughter, Claire, was born just days before my first election — I missed the final campaign swing to be with Melissa and our new baby.
Phil Gramm was my economics professor when I was a student at TAMU.
I once caught a pass from Dallas Cowboys QB Roger Staubach.
Hensarling, Ryan Ridicule Democrats on Community Banks Stance
August 26, 2016
Speaker Paul Ryan (R-Wis.) and House Financial Services Committee Chairman Jeb Hensarling (R-Texas) took aim this week at Democrats’ stance on community bank regulations by criticizing their support for the 2010 Dodd-Frank Act.
Hensarling also took issue with Warren's critique of his Dodd-Frank replacement plan, the Financial CHOICE Act.
"The Financial CHOICE Act offers regulatory relief and no more bailouts," he said. "That's why she opposes it and instead supports Dodd-Frank, which has helped make big banks bigger."
In June, Warren said Hensarling's bill "should be called the Big Wet Kiss for Wall Street Act" because "the bill's proposals come straight off the Wall Street wish list."
WASHINGTON—Congressman Jeb Hensarling (R-TX) released the following statement in response to news reports that Donald Trump will name Mike Pence as his vice presidential running mate:
"Mike Pence is perhaps the most principled conservative leader in America today. He comes from the heartland and speaks from the heart. He has shown he can both fight and lead for the cause of freedom in order to lift up the common man—even taking on his Party's leadership whenever necessary. He's battled tested. He’s respected, liked, and admired by all who ever worked with him. Mike inspires people, and his boundless optimism in America is infectious at a time when so many have lost hope. If selected, he will be a great addition to the ticket and he will make a great Vice President. Personally, I am proud to call him my friend."
Fixing American Finance
July 10, 2016
Wall Street Journal Editorial
House Republicans are rolling out their 2017 agenda, and one promising idea is Financial Services Chairman Jeb Hensarling’s plan for financial rules that promote economic growth and protect taxpayers.
Don't believe the shrieks that this is about "rolling back" financial reform to let the banks run wild. The financial system was heavily regulated before the 2008 panic; regulators failed to do their job (see Citigroup) and missed signals from the housing market, among other mistakes. The Dodd-Frank Act of 2010 doubled down on the same approach: Give even more power to regulators with the promise they'll be smarter the next time.
History tells us that is a fantasy. Regulators will focus on solving the previous problem, while they miss where the excesses are really building. As Charles Kindleberger taught, the essence of a credit mania is that everyone follows everyone else and thinks it will never end. Regulators are no better than bankers. As late as March 2008, then New York Fed President Tim Geithner was telling his colleagues on the Open Market Committee that banks were in good shape.
Mr. Hensarling has a better idea, which is to let banks build much higher equity-capital cushions to protect against the next mania and panic. Now, as before the crisis, regulators pretend that giant banks have abundant resources to absorb losses by allowing them to report a bogus "Tier 1 risk-based capital ratio."
With a complicated process subject to intense lobbying, regulators undercount exposures they deem to be safe—the way they designated mortgage-backed securities rock-solid before the last panic. This allows well-connected bankers to convince Washington that their favorite assets should have low "risk weights." Regulators can politically allocate credit by favoring some types of lending over others.
The Texas Congressman wants a simpler system in which private investors with money at risk decide which assets are safe. Under the Hensarling plan, banks can opt out of today's complicated rules if they have capital equal to 10% of their assets. Their tally of assets has to include off-balance-sheet exposures. No more hiding toxic paper in conduits or structured-investment vehicles as Mr. Geithner allowed Citi to do before the financial crisis. And no more pretending that a financial instrument has no risk because a regulator says so.
Capital at the largest banks today often runs below 7% of assets. The Wall Street giants would have to raise a lot more equity—and therefore pose less danger to the public—to get regulatory relief. They thus may not like the Hensarling plan, which is fine. Smaller competitors willing to operate without a taxpayer safety net deserve the advantage of lower regulatory costs.
One reason the 2008 panic was so severe is that the government had encouraged all financial institutions to invest in the same stuff. When housing declined, they were all in trouble. Dodd-Frank is encouraging the same mistakes. Witness the recent insanity of Washington forcing Wells Fargo to issue more debt so it can look more like the Wall Street giants at the heart of the government’s regulatory model.
The Hensarling plan would make the financial system more stable by encouraging greater diversity. Freed to make their own decisions on the quality of assets, some banks would run off the rails, but they are less likely to make the same mistake at the same time.
Mr. Hensarling goes further in shrinking the safety net by kicking non-banks out of the too-big-to-fail club. This means no more taxpayer-backed derivatives trading, a Dodd-Frank innovation that has given Wall Street's giant clearinghouses access to emergency loans from the Federal Reserve.
Whether a Wall Street giant is a bank or not, the creditors of its subsidiaries should no longer be protected by Dodd-Frank's political "resolution" process. Mr. Hensarling aims to create a special bankruptcy court for large financial companies with experienced judges and the resources to act quickly—but these resources will not include a taxpayer bailout.
The promise of the Hensarling plan is more safety for taxpayers and a banking system that supports a growing economy. One reason Dodd-Frank has never delivered the economic boost that President Obama promised in 2010 is that Washington's distorting role in the flow of credit was dramatically increased.
In this era of hyper-regulation, David Malpass of Encima Global notes that banks have been making relatively few loans to small and mid-size companies while extending huge credit to large corporations and government. A slow-growth economy that doesn't efficiently allocate credit isn’t safe for anyone.
Hensarling Releases Statement on FBI’s Investigation of Secretary Clinton
July 5, 2016 2:28 pm Central Time
WASHINGTON—Congressman Jeb Hensarling (R-TX) released the following statement after FBI Director James Comey recommended to the Justice Department that Secretary Clinton not face criminal charges following an investigation into the private email server she used while serving as Secretary of State:
"Today's recommendation from Director Comey reaffirms there is one set of rules for the Clintons and another for everyone else. Comey himself called Clinton 'extremely careless' and said she 'should have known better' when sending classified emails over her private server. Yet, it seems, she'll face nothing more than a slap on the wrist.
"Though she may not face criminal charges for her conduct, we do know this: Hillary Clinton intentionally misled the public, mishandled classified information, and put our national security at risk. This should, at a minimum, disqualify her from being Commander in Chief. We should expect more from our elected leaders, and those seeking the highest office in the land should be held to a higher standard."
The Case Against Dodd-Frank: How the "Consumer Protection" Law Endangers Americans
June 23, 2016
The Case Against Dodd–Frank: How the "Consumer Protection" Law Endangers Americans grew from a shared concern among the contributing authors about the direction that financial regulation in this country has taken since the 2007–2009 financial crisis due to the regulations of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. Rather than dealing with the causes of the crisis, Dodd-Frank exacerbated and compounded the economy’s existing ills. The resulting financial regulatory framework has restrained the economy’s recovery, introduced even more moral hazard, and expanded the number of firms that are too big to fail. The contributors to this volume have used their knowledge of the financial sectors covered by Dodd-Frank to explain problems the act creates, and to propose solutions to them. The contributors have combined their work to paint a more comprehensive picture of this deeply flawed law, and – lest the reader despair – offer proposals for improving the way the financial markets are regulated.
A top House Republican is preparing to unveil his plan to overhaul how the government regulates Wall Street.
House Financial Services Committee Chairman Jeb Hensarling (R-Texas) will present the GOP alternative to the Dodd-Frank financial reform law in a New York City speech on June 7.
The committee announced the speech Tuesday, which will be delivered before the Economic Club of New York. In the announcement, the speech was billed as outlining "the Republican plan to replace the Dodd-Frank Act and promote economic growth."
Hensarling's plan will come just days after Donald Trump said he would want to effectively eradicate Dodd-Frank if elected president.
Congressman Jeb Hensarling meets with local residents harmed by financial red tape
April 9, 2016
U.S. Congressman Jeb Hensarling visited Jacksonville Friday, to visit with East Texans who have been negatively impacted by the Obama Administra-tion’s financial regulatory legislation known as the Dodd-Frank Act.
Hensarling spent time at the Austin Bank hearing about the strain Dodd-Frank has put on the bank's customers and their community.
"The undeniable truth is the economy still isn't working like it could and should for East Texans," he said, noting that "many remain stuck in the slowest and weakest economic recovery of their lifetimes."
"One of the biggest reasons for this is the 'one size fits all' regulations found in the Obama Financial Control Law that harm consumers and suffocate their hometown banks and credit unions," Hensarling explained. "The climate of uncertainty created by these excessive regulations are harming our economy and destroying opportunities for growth."
We are very proud to have the support of an organization like Freedom Works.
"Rep. Jeb Hensarling was first elected to Congress in 2002 to represent Texas’ 5th Congressional District. He holds a lifetime score of 91 percent on the FreedomWorks Congressional Scorecard, has won the annual FreedomFighter Award multiple times, and achieved a perfect score for three consecutive years."
It is an honor to be invited to address the thousands of liberty loving, movement conservatives at #CPAC2016. I look forward to sharing with them our vision for the Article I Project and how they can help Senator Mike Lee and I reclaim Congress' constitutional authority from the Executive Branch. Stay tuned for more details.
Article I Project Aims to Restore Balance Between Congress, White House
February 5, 2016
Following the three-day National Lawyers Convention in Washington in November sponsored by the Federalist Society, the Article I Project was announced. Designed to restore the balance of powers provided for by the Founders in Article I of the U.S. Constitution, the project was picked up quickly by Representatives Mike Lee (R-Utah) and Jeb Hensarling (R-Texas).
The Family Research Council Action’s Vote Scorecard has been released, and I am proud to once again have the distinction of being named a "True Blue" legislator with a 100% score. You can the full scorecard below.
"All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives." — Article I, Section 1, U.S. Constitution
The federal government is broken. And while there is plenty of blame to go around, only Congress can fix it.
We don’t mean this as an indictment of any one leader or party, because the dysfunction in Washington today has accreted over decades, under Houses, Senates, and presidents of every partisan combination, as well as the many different justices of the Supreme Court.