CFPB: The Bureau of Situational Social Justice

When Sen. Dick Durbin (D-IL) was convinced by a retailing giant to enact legislation imposing price controls on credit card transactions he engineered a massive wealth transfer from credit card companies to retailers – a cost that would ultimately be borne by consumers.  Opponents of Durbin’s fee warned of the consequences of his actions including increased costs for consumers and elimination of credit card incentive programs.  As Milton Friedman said, “there is no free lunch.”

After the government imposed their fee cap, the marketplace responded predictably.  Banks, including Bank of America, raised fees on consumers in order to cover the cost imposed by the Durbin Amendment.  Caught with his tail between his legs, Durbin and his allies declared war on the banks.  In a letter to the newly codified Consumer Financial Protection Bureau (CFPB), Durbin accused banks of trying to “sneak fees past” consumer and “urge[d]” the CFPB to “swiftly require financial institutions to post on their websites a standardized, concise and consumer-friendly disclosure form that lists the fees and key terms associated with checking accounts.”

Whether Durbin is successful in fighting back remains to be seen but what we do know is we now have a government agency at the disposal of elected officials that will police marketplace policies, fee structures and pricing decisions.  If it’s not bad enough that the Bureau will make regulatory decisions based on the political whims of politicians, their own justification for regulations are worse.  Much worse.

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