Disapproving the rule submitted by the Bureau of Consumer Financial Protection relating to "Defining Larger Participants of a Market for General-Use Digital Consumer Payment Applications".

— 837 — Financial Regulatory Agencies l Require the SEC and the CFTC to publish a detailed annual report on SRO supervision. AUTHOR’S NOTE: The preparation of this chapter was a collective enterprise of individuals involved in the 2025 Presidential Transition Project. All contributors to this chapter are listed at the front of this volume, but Paul Atkins, C. Wallace DeWitt, Christopher Iacovella, Brian Knight, Chelsea Pizzola, and Andrew Vollmer deserve special mention. The author alone assumes responsibility for the content of this chapter, and no views expressed herein should be attributed to any other individual. CONSUMER FINANCIAL PROTECTION BUREAU Robert Bowes The Consumer Financial Protection Bureau (CFPB) was authorized in 2010 by the Dodd–Frank Act.32 Since the Bureau’s inception, its status as an “inde- pendent” agency with no congressional oversight has been questioned in multiple court cases, and the agency has been assailed by critics33 as a shakedown mecha- nism to provide unaccountable funding to leftist nonprofits politically aligned with those who spearheaded its creation. In 2015, for example, Investor’s Business Daily accused the CFPB of “diverting potentially millions of dollars in settlement payments for alleged victims of lending bias to a slush fund for poverty groups tied to the Democratic Party” and plan- ning “to create a so-called Civil Penalty Fund from its own shakedown operations targeting financial institutions” that would use “ramped-up (and trumped-up) anti-discrimination lawsuits and investigations” to “bankroll some 60 liberal non- profits, many of whom are radical Acorn-style pressure groups.”34 The CFPB has a fiscal year (FY) 2023 budget of $653.2 million35 and 1,635 full- time equivalent (FTE) employees.36 From FY 2012 through FY 2020, it imposed approximately $1.25 billion in civil money penalties;37 in FY 2022, it imposed approximately $172.5 million in civil money penalties.38 These penalties are imposed by the CFPB Civil Penalty Fund, described as “a victims relief fund, into which the CFPB deposits civil penalties it collects in judicial and administrative actions under Federal consumer financial laws.”39 The CFPB is headed by a single Director who is appointed by the President to a five-year term.40 Its organizational structure includes five divisions: Operations; Consumer Education and External Affairs; Legal; Supervision, Enforcement and Fair Lending; and Research, Monitoring and Regulations.41 Each of these divisions reports to the Office of the Director, except for the Operations Division, which reports to the Deputy Director. Passage of Title X of Dodd–Frank was a bid to placate concern over a series of regulatory failures identified in the wake of the 2008 financial crisis. The law imported a new superstructure of federal regulation over consumer finance and — 838 — Mandate for Leadership: The Conservative Promise mortgage lending and servicing industries traditionally regulated by state bank- ing regulators. Consumer protection responsibilities previously handled by the Office of the Comptroller of the Currency, Office of Thrift Supervision, Federal Deposit Insurance Corporation, Federal Reserve, National Credit Union Admin- istration, and Federal Trade Commission were transferred to and consolidated in the CFPB, which issues rules, orders, and guidance to implement federal consumer financial law. The CFPB collects fines from the private sector that are put into the Civil Pen- alty Fund.42 The fund serves two ostensible purposes: to compensate the victims whom the CFPB perceives to be harmed and to underwrite “consumer education” and “financial literacy” programs.43 How the Civil Penalty Fund is spent is at the discretion of the CFPB Director. The CFPB has been unclear as to how it decides what “consumer education” or “financial literacy programs” to fund.44 As noted, critics have charged that money from the Civil Penalty Fund has ended up in the pockets of leftist activist organizations. In Seila Law LLC v. Consumer Financial Protection Bureau,45 the Supreme Court of the United States held that the CFPB’s leadership by a single individual remov- able only for inefficiency, neglect, or malfeasance violated constitutional separation of powers requirements because “[t]he Constitution requires that such officials remain dependent on the President, who in turn is accountable to the people.”46 The CFPB Director is thus subject to removal by the President. The CFPB is not subject to congressional oversight, and its funding is not determined by elected lawmakers in Congress as part of the typical congressional appropriations process. It receives its funding from the Federal Reserve, which is itself funded outside the appropriations process through bank assessments. CFPB funding represents 12 percent of the total operating expenses of the Fed- eral Reserve and is disbursed by the unelected Board of Governors of the Federal Reserve System.47 This is not the case with respect to any other federal agency. On October 19, 2022, in Community Financial Services Association of America v. Consumer Financial Protection Bureau, the U.S. Court of Appeals for the Fifth Circuit held that the CFPB’s “perpetual insulation from Congress’s appropriations power, including the express exemption from congressional review of its funding, renders the Bureau ‘no longer dependent and, as a result, no longer accountable’ to Congress and, ultimately, to the people”48 and that “[b]y abandoning its ‘most complete and effectual’ check on ‘the overgrown prerogatives of the other branches of the government’—indeed, by enabling them in the Bureau’s case—Congress ran afoul of the separation of powers embodied in the Appropriations Clause.”49 The Court further remarked that the CFPB’s “capacious portfolio of authority acts ‘as a mini legislature, prosecutor, and court, responsible for creating substantive rules for a wide swath of industries, prosecuting violations, and levying knee-buckling penalties against private citizens.’”50

— 872 — Mandate for Leadership: The Conservative Promise While the explanations for this shift are not clear, what is particularly disturbing is the possibility that these rents are extracted at least in part through regulatory capture—which can function as a bar to entrance for new competitors. In addition, the sheer cost of compliance with regulation favors large firms, which can more efficiently spread the cost of regulation over a larger revenue base and have the resources to invest in sophisticated government relations. The FTC must consider, therefore, the role of government itself in maintaining market concentration in areas ranging from pharmaceuticals and healthcare to avionics, banking, and real estate brokerage. Beyond undermining small businesses and reducing their salubrious moral effect on American civil society, concentration of economic power facilitates col- lusion between government and private actors, undermining the rule of law. The continued emergence of evidence documenting collusion—between the Big Tech internet platforms and the Biden White House and administrative agencies—to censor criticism, scientific fact, and uncomfortable political truths demonstrates this unfortunate development. But, there are some caveats. First, the FTC lacks the power to revisit developments in antitrust laws, which have brought an invaluable rigor to the antitrust law—mat- ters such as analyzing vertical integration, for example. Nor should it. Second, the FTC’s recent rescinding of its 2015 Policy Statement was undoubtedly ill-consid- ered.11 Of course, the consumer welfare standard must guide FTC action, but, in appropriate situations and with strong evidence, this standard must be expanded to include more factors than just price. Further, a similar standard of proof used to establish that a practice challenged by the Commission causes harm to competition must also apply in demonstrating the efficiencies that justify the practices. President Harry Truman reportedly made the famous quip, “Give me a one- handed economist. All my economists say ‘on the one hand…’, then ‘but on the other.’” When it comes to some of the more vexing issues in antitrust regulation, the conservative movement is in the same predicament. Many wish to preserve the productivity and efficiency focus of an economic-based consumer welfare standard approach to antitrust enforcements; others are more willing to look at the effects of business concentration in certain industries on innovation, the institutional resilience of our democracy, and children’s development. The following discussion sets forth policy principles and initiatives on which there was agreement among the contributors to this chapter, and notes and explains where there was dissent. NEEDED REFORMS Should the FTC Enforce Antitrust—or Even Continue to Exist? Some conservatives think that antitrust enforcement should be invested solely in the Department of Justice (DOJ). The FTC’s commissioners are not removable at will by the President, which many quite reasonably believe violates the Vesting Clause

— 872 — Mandate for Leadership: The Conservative Promise While the explanations for this shift are not clear, what is particularly disturbing is the possibility that these rents are extracted at least in part through regulatory capture—which can function as a bar to entrance for new competitors. In addition, the sheer cost of compliance with regulation favors large firms, which can more efficiently spread the cost of regulation over a larger revenue base and have the resources to invest in sophisticated government relations. The FTC must consider, therefore, the role of government itself in maintaining market concentration in areas ranging from pharmaceuticals and healthcare to avionics, banking, and real estate brokerage. Beyond undermining small businesses and reducing their salubrious moral effect on American civil society, concentration of economic power facilitates col- lusion between government and private actors, undermining the rule of law. The continued emergence of evidence documenting collusion—between the Big Tech internet platforms and the Biden White House and administrative agencies—to censor criticism, scientific fact, and uncomfortable political truths demonstrates this unfortunate development. But, there are some caveats. First, the FTC lacks the power to revisit developments in antitrust laws, which have brought an invaluable rigor to the antitrust law—mat- ters such as analyzing vertical integration, for example. Nor should it. Second, the FTC’s recent rescinding of its 2015 Policy Statement was undoubtedly ill-consid- ered.11 Of course, the consumer welfare standard must guide FTC action, but, in appropriate situations and with strong evidence, this standard must be expanded to include more factors than just price. Further, a similar standard of proof used to establish that a practice challenged by the Commission causes harm to competition must also apply in demonstrating the efficiencies that justify the practices. President Harry Truman reportedly made the famous quip, “Give me a one- handed economist. All my economists say ‘on the one hand…’, then ‘but on the other.’” When it comes to some of the more vexing issues in antitrust regulation, the conservative movement is in the same predicament. Many wish to preserve the productivity and efficiency focus of an economic-based consumer welfare standard approach to antitrust enforcements; others are more willing to look at the effects of business concentration in certain industries on innovation, the institutional resilience of our democracy, and children’s development. The following discussion sets forth policy principles and initiatives on which there was agreement among the contributors to this chapter, and notes and explains where there was dissent. NEEDED REFORMS Should the FTC Enforce Antitrust—or Even Continue to Exist? Some conservatives think that antitrust enforcement should be invested solely in the Department of Justice (DOJ). The FTC’s commissioners are not removable at will by the President, which many quite reasonably believe violates the Vesting Clause — 873 — Federal Trade Commission of Article II of the Constitution; it is for this reason that conservatives have long believed in either ending law enforcement activities of independent agencies or ending their independent status. The Supreme Court ruling in Humphrey’s Execu- tor12 upholding agency independence seems ripe for revisiting—and perhaps sooner than later.13 Others think that the post–New Deal expansion of the administrative state has had baleful effects upon our society and earnestly share the hope that it can be greatly curtailed if not eliminated—or that its authority can be returned to the states and other democratically accountable political institutions. But, until there is a return to a constitutional structure that the Founding Fathers would have rec- ognized and a massive shrinking of the administrative state, conservatives cannot unilaterally disarm and fail to use the power of government to further a conserva- tive agenda. As experience shows, the administrative state will grow and further its own agenda, often at odds with conservative thought, even under conservative leadership. Unless conservatives take a firm hand to the bureaucracy and marshal its power to defend a freedom-promoting agenda, nothing will stop the bureaucra- cy’s anti–free market, leftist march. ESG Practices as a Cover for Anticompetitive Activity and Possible Unfair Trade Practices. It has long been suspected, and is now increasingly documented, that corporate social advocacy on issues ranging from “Diversity, Equity, and Inclusion” (DEI) to the “environmental, social, and governance” (ESG) movement also serves to launder corporate reputation and perhaps obtain favorable treatment from government actors. In a recent Senate Judiciary hear- ing, Senator Josh Hawley asked FTC Chair Lina Khan if the FTC had conditioned merger reviews on ESG or critical race theories adopted by the firms involved. Khan responded by saying that she turned down deals when firms offered social justice policies in return for approving unlawful deals. In response to a similar question from Senator Tom Cotton, Khan responded that firms try to come to the FTC to get out of antitrust liability by offering climate, diversity, or other forms of ESG-type offerings, but that there is no ESG loophole in the antitrust laws.14 Her comments suggest that there is a movement of firms attempting to use both ESG and DEI as a sort of reputational laundering to avoid enforcement of potentially criminal activity. The FTC should set up an ESG/DEI collusion task force to investigate firms—particularly in private equity—to see if they are using the practice as a means to meet targets, fix prices, or reduce output. l Congress should investigate ESG practices as a cover for anticompetitive activity and possible unfair trade practices. The business of American business is business, not ideology. The privileges extended to corporations in American society come with the expectation that