07.29.2011 0

Time to Eliminate Metaagencies

By Victor Morawski – What I mean by a “metaagency” can best be illustrated by using a concrete, real-world example, which I shall do immediately below.

In the abstract, a “metaagency” is “An agency that duplicates, coordinates and centralizes the regulatory functions of other agencies with respect to some specific area of activity.” These form, as it were, a second tier of regulatory bureaucracy.

My main point is that because metaagencies — focusing now on federal metaagencies — by their very nature, tend to duplicate the regulatory functions of other already-existing federal agencies, in an era of ballooning federal deficits, these should be sharply scrutinized and their very existence challenged as luxuries we can no longer afford (if we could ever afford them).

A prime example of just such an agency is the newly-created “Consumer Financial Protection Bureau” (CFPB) to which Barack Obama has just nominated Richard Cordray for confirmation as its first head.

According to Elizabeth Warren, who set up the new agency, it “would heighten government accountability by consolidating in one place responsibilities that had been scattered across government.” Specifically, it would consolidate “consumer financial protection authorities that had existed across seven different federal agencies into one.”

These agencies are the “Office of the Comptroller of the Currency, Office of Thrift Supervision, Federal Deposit Insurance Corporation, Federal Reserve, National Credit Union Administration, the Department of Housing and Urban Development, and Federal Trade Commission.”

Why have this new metaagency?

One reason given is that the new agency can act faster than the old ones: “With this Bureau on the lookout for bad deals and schemes, consumers won’t have to wait for Congress to pass a law to be protected from bad business practices.” Aside from the obvious question, “Why do we need such swift governmental regulatory action in this particular area”? there is the equally obvious one of whether it is even good to have a regulatory agency that is specifically set up to do an end run around the peoples’ elected Congressional representatives. (This is a strategy that Progressives have used as far back as Woodrow Wilson to get around Constitutional safeguards.) This is often a troubling characteristic of metaagencies.

Noticing this, in May 44 Senators sent a letter to President Obama declaring that they would confirm no one that he nominated to head this bureau until some serious structural changes were made like replacing its single head — who they think has just too much power — with a board and subjecting it to the regular appropriations process as a reasonable control.

But the most prominent reason usually given to justify the formation of a new metaagency — and it is used to justify this one — is that there are gaps in the current regulatory structure: “With many agencies sharing responsibility, it’s hard to know who is responsible for what, and easy for emerging problems that haven’t historically fallen under anyone’s purview, to fall through the cracks.” We might call this reasoning “The Gaps Argument” and summarize it as follows:

Gaps occur in the current regulatory structure dealing with activity A. The best way to fill in these gaps is through the creation of a new metaagency governing A. Therefore, a new metaagency governing A should be created.

The obvious reply would question the argument’s weak second premise: if it is so important that some or all of these gaps be filled in — something which is usually by no means obvious — why do we need to create an entirely new metaagency to do so? Why can’t we simply tweak the responsibilities of one or more of the already-existing agencies to accomplish this? Need a given activity A be so restrictively regulated to begin with that nothing falls through the cracks? And is this an unrealistic regulatory goal anyway?

While calling for the restructuring of the CFPB is worthwhile, other members of Congress are working on legislation that would do away with it entirely as well as other aspects of Dodd-Frank, the bill which brought it into existence. I heartily support these efforts.

We here have a rare chance to nip in the bud the creation of a new federal metaagency which should not be passed on.

A fellow graduate student once had a humorous sign on his office door that read “Department of Redundancy Department”; we all found it amusing. The sad fact is that the federal government is populated with too many real Department of Redundancy Departments — and that is not amusing.

Victor Morawski, professor at Coppin State University, is a Liberty Features Syndicated writer.

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