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Trump’s Economic Era

heightened supervision by the Federal Reserve Board of
Governors making a mockery of property rights and due
process. The FSOC can now threaten large financial
institutions with “systemic risk designation” with no
real avenue for defense. The designation gives the
government a say in some business decisions made by
the financial institutions, including new requirements
that are beyond written corporate laws or existing
financial regulations.

The Consumer Financial Protection Bureau’s and
the Financial Stability Oversight Council’s
constitutional violations are not merely the focus of
law-school debates; they pose a direct threat to
economic recovery. Community banks are afraid of
lending money because the CFPB might later decide
that the loans were unfair. American finance is
becoming more political, less vibrant, and further
removed from the rule of law principles. In fact,
regulators can take over a struggling bank and every
affiliate in the bank’s network by claiming that it may
default and that its default could have adverse effects on
the nation’s stability.
The original purpose of the CFPB is sound. Its
mission to protect and empower consumers, promote
fair and competitive markets, and to stabilize the
financial system are noble and worthwhile goals. But
poorly designed regulations choke off access to credit,
cause higher interest rates and limit consumer choice.
The federal government and much of the
financial system could not function without the help of
private accounting corporations such as Promontory,
Deloitte, PricewaterhouseCoopers and Ernst & Young.
Regulators and banks hire these firms to investigate

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