Congressman Canseco's Statement on Creation of New Office at the Consumer Financial Protection Bureau

Washington, D.C. - Congressman Francisco “Quico” Canseco (TX-23), a member of the House Financial Services Committee, issued the following statement regarding the creation of a new office at the Consumer Financial Protection Bureau (CFPB) to promote financial industry diversity:

 

“Here we go again.  Even I could have never imagined that it would take the Consumer Financial Protection Bureau so little time to deviate from their stated goal of protecting consumers from “deceptive” financial practices.  But with the recent announcement from the CFPB that they will begin collecting data from financial industry participants regarding their “diversity policies” in order to promote “best practices”, yet another federal regulator has crossed the line from objective regulation to social policy midwifery.”   

 

“This type of mission creep has led to disaster before, yet some in Washington still haven’t learned their lesson.  For almost two decades Fannie Mae and Freddie Mac, the government-backed mortgage giants at the heart of the financial crisis, were overseen by two regulators that had starkly different missions.  On one side, the Department of Housing and Urban Development (HUD) urged Fannie and Freddie to drop underwriting standards year after year in order to promote the social goal of increased homeownership.  On the other side, the Office of Federal Housing Enterprise Oversight (OFHEO) was tasked with ensuring the finances of Fannie and Freddie remained sound.  We know how this turned out – social goals won out and by 2007 Fannie and Freddie had an outrageous credit leverage ratio of 70:1 on $5 trillion of assets, many of which were low-quality or “subprime” mortgages that defaulted.  This disaster has led to a nearly $200 billion tab for taxpayers.” 

 

“Similarly, in 1978 Congress gave the Federal Reserve (Fed) a so-called “dual mandate” of price stability and full employment, two goals that are in clear contradiction of one another.  The mandate of “full employment” – something that, in my opinion, should be the private sector’s responsibility to achieve – has recently given the Fed cover to keep interest rates extremely low for a long time and to embark on two rounds of “quantitative easing”.  These extraordinary steps by the Fed have penalized responsible savers and made inflation a huge risk for our economy going forward.  Even with all this, our economy is nowhere near “full employment.”  

 

“Regulators should regulate in order to guarantee the safety and soundness of the U.S. financial sector.  They shouldn’t get caught up in the push by Washington insiders to achieve some predetermined social goal.  The resulting mission creep only damages their ability to be objective and to take into account the interest of all stakeholders.  We’ve seen this movie before, and it doesn’t end well,” concluded Congressman Canseco. 

 

To schedule an interview please contact Kyler Arnold at (202) 225-4511 or Kyler.Arnold@mail.house.gov