Compliance consultant Lucy Griffin recently discussed the fact that a number of banks have been pushed around by the CFPB on questionable legal grounds, and she suggests that, perhaps, instead of rolling over, banks should “push back.”
Lucy rightly notes that the CFPB has made transformed its “supervisory” role into an “enforcement” role. According to Lucy, the CFPB has become the FTC “on steroids.” I suppose that explains the “Roid Rage” of its creator, Lizzie Borden Warren, a woman whose public persona resembles that of a wolverine on a bad acid trip, albeit a wolverine with a pair of bifocals perched half-way down her schnoz and with the air perpetual outrage and aggrievement emanating from regions best left unexplored.
Lucy complains that even where in areas like fair lending, where the Adjustment Bureau’s use of questionable statistical analyses to draw even more questionable conclusions merits a vigorous defense, most banks don’t fight back. She explains why.
Fighting back is indeed a risk. It is expensive, results in bad press.
That’s true. These factors are compounded by the fact that the Bureau doesn’t have much accountability for the money it spends on “its mission,” and is an ideologically-driven step-child of progressivism, which values strong central government action to level the playing field and root out evil where it sees it, as only it can see it from its lofty home above the clouds. When it comes to punishing the forces of the Dark Lord, no expense is too much. Plus, with no shareholders, and no effective Congressional oversight over its budget (or its sole Director), it can spend what it pleases and push around whoever it wants to push around. As we’ve noted previously, this is an agency that depends more than any other agency on the wisdom and virtue of its Director, since his favorite song is “Unchained Melody” and it lacks effective structural checks and balances.
On the other hand, Lucy asks, “banks get bad press even when they do the right thing. But when banks give in, they are guaranteed to lose.”
Why not push back? The worst thing that could happen is that the bank could lose. That’s going to happen anyway.
But you also just might win.
Don’t hold your breath, Lacy. It’s a business decision, and most businesses, including banks, aren’t going to wage war in the federal courts with an enemy with practically unlimited staying power and financial resources unless the CFPB leaves them no choice but to slug it out. Sure, the bank might win, but what it has to lose is the same thing any prevailing party gains from a pyrrhic victory: a “win” that leaves them so weakened that they might as well have lost.