— 839 —
Financial Regulatory Agencies
On February 27, 2023, the Supreme Court granted the petition for a writ of
certiorari.51 The Court should issue its final decision by 2024.
The CFPB is a highly politicized, damaging, and utterly unaccountable federal
agency.52 It is unconstitutional. Congress should abolish the CFPB and reverse
Dodd–Frank Section 1061, thus returning the consumer protection function of
the CFPB to banking regulators53 and the Federal Trade Commission. Provided
the Supreme Court affirms the Fifth Circuit holding in Community Financial Ser-
vices Association of America, the next conservative President should order the
immediate dissolution of the agency—pull down its prior rules, regulations and
guidance, return its staff to their prior agencies and its building to the General
Services Administration.
Until this can be accomplished, however, Congress should:
l Ensure that any civil penalty funds not used to recompense wronged
consumers go to the Department of the Treasury. The funds should not
be retained by the Bureau to be dispensed at the pleasure of the Director—
potentially to political actors. Moreover, the CFPB should not have a
financial incentive to impose penalties.
l Repeal Dodd–Frank Section 1071. This section, which relates to small-
business data collection, imposes requirements on financial institutions’
lending to small firms, raises costs, and limits small businesses’ access
to capital.54
l Require that no CFPB funds are spent on enforcement actions that
are not based on a rulemaking that complies with the Administrative
Procedure Act.55
l Require that respondents in administrative actions be allowed to
elect whether an adjudication occurs in an administrative law court
or an ordinary Article III federal court.56
l Specify the nature of “deceptive, unfair, and abusive” practices to
define the scope of the CFPB mission more precisely.
— 840 —
Mandate for Leadership: The Conservative Promise
ENDNOTES
1. H.R. 5480, Securities Act of 1933, Public Law No. 73-22, 73rd Congress, May 27, 1933, https://govtrackus.
s3.amazonaws.com/legislink/pdf/stat/48/STATUTE-48-Pg74.pdf (accessed February 20, 2023).
2. H.R. 9323, Securities Exchange Act of 1934, Public Law No. 73-291, 73rd Congress, June 6, 1934, https://
govtrackus.s3.amazonaws.com/legislink/pdf/stat/48/STATUTE-48-Pg881a.pdf (accessed February 20, 2023).
3. Mark T. Uyeda, Commissioner, U.S. Securities and Exchange Commission, “Remarks at the 2022 Cato
Summit on Financial Regulation,” November 17, 2022, https://www.sec.gov/news/speech/uyeda-remarks-
cato-summit-financial-regulation-111722 (accessed February 20, 2023); Hester M. Peirce, Commissioner, U.S.
Securities and Exchange Commission, “It’s Not Just Scope 3: Remarks at the American Enterprise Institute,”
December 7, 2022, https://www.sec.gov/news/speech/peirce-remarks-american-enterprise-institute-120722
(accessed February 20, 2023); comment letter from David R. Burton to Vanessa A. Countryman, Secretary,
Securities and Exchange Commission, “Re: The Enhancement and Standardization of Climate-Related
Disclosures for Investors [File No. S7-10-2; Release No. 33-11042; RIN 3235-AM87],” June 17, 2022, https://www.
sec.gov/comments/s7-10-22/s71022-20131980-302443.pdf (accessed February 20, 2023).
4. Size would probably be measured best by public float or the number of beneficial owners.
5. See David R. Burton, “Securities Disclosure Reform,” Heritage Foundation Backgrounder No. 3178, February
13, 2017, https://www.heritage.org/sites/default/files/2017-02/BG3178.pdf; David R. Burton, “Offering and
Disclosure Reform,” Chapter 11 in Reframing Financial Regulation: Enhancing Stability and Protecting
Consumers, ed. Hester Peirce and Benjamin Klutsey (Arlington, VA: Mercatus Center at George Mason
University, 2016), pp. 277–315, https://www.mercatus.org/research/books/reframing-financial-regulation
(accessed February 20, 2023); Andrew N. Vollmer, “Investor-Friendly Securities Reform to Increase Economic
Growth,” Securities Regulation & Law Report, Bloomberg BNA, Vol. 49, June 5, 2017.
6. See, for example, David R. Burton, “Reforming the Securities and Exchange Commission,” Heritage
Foundation Backgrounder No. 3378, January 30, 2019, https://www.heritage.org/sites/default/files/2019-01/
BG3378.pdf; Andrew N. Vollmer, “Testimony on Workforce Management Disclosures and Other SEC Issues,”
submitted to the Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets, Committee
on Financial Services, U.S. House of Representatives, December 6, 2022, https://www.congress.gov/117/
meeting/house/115227/witnesses/HHRG-117-BA16-Wstate-VollmerA-20221208.pdf (accessed February 20,
2023); David R. Burton, “Reforming FINRA,” Heritage Foundation Backgrounder No. 3181, February 1, 2017,
https://www.heritage.org/sites/default/files/2017-02/BG3181.pdf; Hester Peirce, “The Financial Industry
Regulatory Authority: Not Self-Regulation After All,” Mercatus Center at George Mason University Working
Paper, January 2015, https://www.mercatus.org/research/working-papers/financial-industry-regulatory-
authority-not-self-regulation-after-all (accessed February 20, 2023); Thaya Brook Knight, “Transparency and
Accountability at the SEC and at FINRA,” Chapter 11 in Prosperity Unleashed: Smarter Financial Regulation,
ed. Norbert J. Michel, (Washington: The Heritage Foundation, 2017) https://www.heritage.org/sites/default/
files/2017-02/11_ProsperityUnleashed_Chapter11.pdf.
7. Reorganization Plan No. 10 of 1950, U.S. Code Title 5—Appendix, Reorganization Plans, http://uscode.house.
gov/view.xhtml?req=granuleid:USC-prelim-title5a-node84-leaf114&num=0&edition=prelim (accessed
February 20, 2023).
8. The board or commission should evaluate the regulatory functions of the National Securities Exchanges,
Registered Securities Future Product Exchanges, Registered Clearing Agencies (such as the Depository Trust
Company (DTC), the National Securities Clearing Corporation (NSCC) and the Options Clearing Corporation
(OCC)), the Municipal Securities Rulemaking Board (MSRB) and the National Futures Association (NFA). This
board or commission should have a broad composition and permit minority reports.
9. Boyden Gray & Associates, Comments Submitted on Behalf of Alliance for Fair Board Recruitment Concerning
the Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change to Adopt Listing Rules Related
to Board Diversity, Amendment No. 1, File No. SR-NASDAQ-2020-081, April 6, 2021 https://www.sec.gov/
comments/sr-nasdaq-2020-081/srnasdaq2020081-8639478-230941.pdf (accessed February 20, 2023);
David R. Burton, “Nasdaq’s Proposed Board-Diversity Rule Is Immoral and Has No Basis in Economics,”
Heritage Foundation Backgrounder No. 3591, March 9, 2021, https://www.heritage.org/sites/default/
files/2021-03/BG3591_0.pdf. The SEC is contemplating at least two rules that can be expected to require
differential treatment based on race, sex, ethnicity, and so on. See Executive Office of the President, Office