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Trump’s Economic Era

An example of the CFPB's arbitrary power has
been its use of disparate impact to assess financial
institutions. Disparate impact holds that government
bureaucrats can declare a business practice to be unfair
and illegal if it has a disproportionate adverse impact on
members of a minority group. In other words, the CFPB
has penalized businesses even though no one brings a
discrimination charge against them. If the employees’
makeup does not adhere to the racial or ethnic mix that
the CFBP mandates, the CFPB could declare the firm
guilty of discrimination. And how does the CFPB
determine the ethnic mix? One way is for them to
consider the employee’s last names and make a guess as
to their nationality.

Since its inception, the Consumer Financial
Protection Bureau has imposed fines and fees on
financial institutions, but Congress did not require the
CFPB to transfer the money to the Treasury. The
agency has collected billions of dollars from businesses,
but the agency’s head has determined what happens to
that money. The CFPB has tended to help some groups
but not others, thus giving way to ideological
preference.
When the government makes guesses like this, the
effects on freedom and economic growth are profound.
If a bank lends money and the loan goes bad, regulators
may charge the bank with fraud. If the bank makes a
high return, regulators may deem it too profitable at the
expense of a minority class of people.

The Trump Administration has acted to limit the
independence of the CFPB. The acting director has
asked Congress to take more authority over the bureau's
regulations, leadership, and budget. CFPB rules would

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