“Big Brother.” When commentators use that phrase to describe a
government agency, it is most often not meant as a compliment.
Rather, it is wielded as the ultimate criticism of
government overreach. The pejorative use of this phrase, after all,
dates back more than 60 years to George Orwell’s dystopian novel
1984, in which “Big Brother” was the symbol of a
totalitarian collectivist dictatorship.
Whenever a government agency is called “Big Brother” —
whether by liberals regarding the NSA, by conservatives regarding
the EPA, and regarding the TSA by just about everyone who doesn’t
work there — most defenders of the entity push back against the
use of the phrase. They angrily deny that the entity’s action can
be described as anything close to that of “Big Brother.”
Yet amazingly, Michelle Singletary, the Washington
Post’s nationally syndicated personal finance columnist and
panelist on the much-hyped new ABC lifestyle show The
Revolution, has embraced the phrase in describing her desires
for the new Consumer Financial Protection Bureau. “Watchdog Should
Act Like a Big Brother,” reads the headline of her latest
column in the Post.
After interviewing Richard Cordray, whom President Obama
installed as director of the bureau
in an unprecedented “recess” appointment when the Senate was not
actually in recess, Singletary argues that the bureau has a
mandate to be a “big brother” to American consumers. “The agency,
under his lead, is supposed to be the big brother (or sister)
consumers need to enforce federal consumer financial protection
laws and, if necessary, create rules that will head off unfair,
deceptive or abusive financial practices and products,” she
writes.
Singletary’s column, it should be noted, has traditionally
contained more folksy financial advice than politics. I’ve taken to
heart, for instance, her
promotion of regifting as a way of saving money and giving
people the presents they more likely want. But she has of late been
embracing the nannyist politics of the Left to “nudge” — or more
often shove — ordinary folks into making what she thinks are the
right financial decisions.
Singletary no doubt would say that she is using the term
“big brother” in a benign way, and she gives a touching example of
when she protected her younger brother from a school bully. Yet
regardless of motivation, any call for a government agency to act
like a “big brother” or “big sister” is also a call for the
government to treat its subjects as if they were small children.
Singletary confirms her preference for paternalism when she
admonishes the bureau to “beat back the many bullies who for too
long have taken advantage of consumers,” adding “even those
[consumers] who should know better.”
This paternalism is enshrined in the Dodd-Frank financial
“reform” law that created the bureau and many other “big brother”
bureaucracies and mandates. As Singletary notes, Dodd-Frank gives
the bureau the power to ban not just financial practices and
products that are “unfair” or “deceptive,” but also those that the
bureau simply deems “abusive.” As George Mason University law
professor Todd Zywicki
has written, “abusive” is a vague and subjective legal term
that allows the bureau’s director to “effectively ban many
nontraditional lending products… if he thinks, for example, that
consumers using that form of lending are too dumb to appreciate the
full cost and risk of those products.”
This turns Singletary’s justification of a “big brother”
agency — to “beat back the many bullies” — on its head. As many
younger siblings know all too well, big brothers and big sisters
can sometimes be bullies themselves. And when the government is
denying adults the right to engage in a consensual activity in
which no fraud or deception is alleged, it is the government itself
that is acting as the bully.
We’ve seen examples of this government bullying in the
Obama administration and predating it. “Big Brother” bullies you by
forbidding you from buying an incandescent
light bulb,
gambling online, or building a house on a suburban lot that the
EPA suddenly
and arbitrarily declares to be a “wetland.”
As Ohio Attorney General, Cordray gave some indication
that he will continue in this Big Brother/Big Bully tradition.
First, as I have
reported previously in TAS, Cordray endorsed and
funded the bullies at Ohio’s East Side Organizing Project who storm
the offices and throw plastic sharks on the lawns of officials of
financial firms they disagree with.
But he also showed his desire to be the “big brother” of
ordinary consumers, most of whom this
former Jeopardy! champion appears to deem as too dumb
to make decisions for themselves. Take payday loans, which
President Obama has also condemned and presented as a justification
for the bureau.
In a press conference posted on YouTube, Cordray
tellingly admitted, that if paid back on time, the loans are
more than manageable. “391 percent interest doesn’t sound quite so
bad when it’s $15 ever two weeks for a one-time loan,” he said.
“But we know and we’ve seen that what happens is many people fall
into a debt cycle trap. It’s just not sustainable for many families
in our community.”
So there you have it. “Many people” (and he didn’t specify
how many) fall into debt with certain products, and Cordray’s
answer is not more disclosure, not more financial education, but
having Big Brother deem the products as “not sustainable” and
banning them for everyone, including the “many people” who are
satisfied with the product. Indeed, a slew of academic studies,
most recently from
Kelly Edmiston of the Federal Reserve Bank of Kansas City, have
found that payday loans can be much less expensive than the other
alternatives for short-term emergency credit — namely overdraft
and late payment fees.
And should this “big brother” bureau choose to engage in
paternalistic and bullying behavior, Dodd-Frank is written so that
no one can discipline it. Congress lacks oversight through the
appropriations process, since the bureau automatically can get more
than $500 million each year from the Federal Reserve. And as C.
Boyden Gray, White House counsel under George H.W. Bush,
notes, even the courts can’t “fully review the CFPB’s actions,”
because “Dodd-Frank requires the courts to defer to CFPB’s legal
interpretations.”
But in this country, the Founding Fathers did give us the
ultimate remedy for Big Brother: the U.S. Constitution. Both the
non-recess “recess” appointment and the bureau’s very structure are
an affront to the checks and balances the Framers envisioned and
very likely violate specific constitutional provisions. Look for
lawsuits to be filed against the bureau, similar to the motions
that were
filed on Friday challenging the three “recess” appointments to
the National Labor Relations Board that Obama made the same day as
Cordray’s.
In the meantime, we “little siblings” should express
loudly and clearly to Cordray, Singletary, and all others who think
they “know better” about our financial decisions that they need to
take a permanent “time out.”
