The Consumer Financial Protection Bureau (CFPB), the bugaboo of bankers, is back.

The bureau, a child of the aftermath of the Great Meltdown of 2008, and given life by the Dodd Frank Act was, and is, said by proponents, to be fulfilling its mission of protecting consumers against lending abuses and overcharging, as well as losses suffered by the public from inefficient operations in the financial services sector. Opponents characterize the regulator as a massive boondoggle created to get Congress off the hook in the wake of the 2008 Financial Crisis, and to redundantly protect borrowers from themselves.

Both, in some respects, are spot on.

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In 2010, the CFPB came out swinging. It rapidly became the Big Dog Regulator, with its fiats overriding everybody, including the FDIC and the Federal Reserve. Primarily, this was because it answered to virtually no one. The  president appoints the director of the bureau and, until a recent court decision, could be removed only for cause.

During the Obama administration, its power was seldom blunted, and its decisions were perceived by many as overly punitive and arbitrary. It’s required to report to Congress twice a year, and that’s about it for oversight. It has probably more latitude to regulate than any other federal agency.

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With the installation of a Republican administration, the CFPB’s place in the Big Leagues of regulation was suspended, and it was sent down to double A ball, only to triumphantly return to, if one listens to bankers and others, make life miserable in the financial services industries in 2016.

How much the bureau has helped consumers is not unequivocally clear. It’s successes have been balanced by some notable failures to act, including the Wells-Fargo bogus account scandal wherein bank employees were creating accounts in depositors names that the customers knew nothing of in order to meet new account production goals. The CFPB missed the boat on that one; it was uncovered the old-fashioned way, by a bank exam.

The new director of the agency, Robit Chopra, is a Harvard graduate, and with a degree from the prestigious Wharton School of Business at the University of Pennsylvania. He set out to change all of that, and he appears to be moving fast, probably because a presidential election is just a little over two years away, and another administration change would mean he’s gone as director.

As for protection from ourselves, one has to conclude, given the evidence of the past several years, that we human beings certainly need it. The problem, for Mr. Chopra and others, is that we don’t want it, and we’ll turn it down if tendered. For example, mortgage brokers were probably the top designated villains in the lead-up to the 2008 debacle. They were the ones that were fingered for putting innocent homeowners into Alt-A and subprime mortgages they couldn’t afford. But the brokers, often called mortgage loan officers (MLOs), were mostly simple sales people selling mortgage loan products that their bosses told them to sell. They were doing what humans do: performing in the manner by which they’re compensated.

Sure there was fraud on the part of the loan officers. But there was just as much, maybe even more, on the consumer side.

I’ve quoted this statistic before, probably to the point of reader eye roll over a geezer’s ranting. But it’s a real stat, and meaningful. The bank that I was associated with from 1990 to 2008, joined the feeding frenzy and funded the nonconforming home loans with the creative underwriting guidelines that the big conduits such as Bear Stearns and Lehman Brothers wanted. When those deals went bad early, which many did, we had to buy the loans back.  In August 2007, on the eve of the Great Meltdown, no less than 51% of our problem loans were a result of borrower fraud.

Certainly, the borrowers who took down the so-called “liar loans” with stated incomes new exactly what they were doing; they knew that they really didn’t make that $100,000 per year salary, and that they couldn’t make the proposed payments for any extended period of time if their plan, whatever it was, didn’t work out. But they were perfectly willing to take the money, and would have said “step aside” if some agency employee had stood up and said, “I’m from the government, and I’m here to help save you from yourself.”

Of course, they were quite ready, as we all would be when the collapse came, to say, “We were led astray.”

During the past two financial crises, the S&L debacle of the 1980s and the Great Recession of 2008, the government was criticized for not properly regulating the financial industries, which isn’t exactly fair. They’re not regulators, they’re lawmakers, and they’re just like the rest of us. Being a representative is a cushy job, maybe exceeded only by being a senator. So Congress will perform in line with how they’re compensated, and that means getting reelected.

In drafting and voting on legislation, paramount in a lawmaker’s mind is not “How will this law work in real life” but “How will it fly at the voting booth.” Viewed that way, it’s a wonder that good laws ever get passed. But they do. It’s the way our democracy works.

Maybe we should all remember Winston’s Churchill’s comment on democracy (he didn’t create it, but quoted it well):

“It has been said that democracy is the worst form of government, except for all of the others that have been tried.”

We’ll always be hassled, or protected, depending on one’s outlook, by agencies like the CFPB.

Pat Dalrymple is a western Colorado native and has spent more than 50 years in mortgage lending and banking in the Roaring Fork Valley. He’ll be happy to answer your questions or hear your comments. His email is pdalrymple59@gmail.com.