There’s been some buzz this week about a new poll that, according to its creators, shows overwhelming support for Dodd-Frank and the Consumer Financial Protection Bureau (CFPB). A stunning 74 percent of respondents, the creators claim, support Dodd-Frank while 77 percent support the CFPB.
But what has not been as widely reported is how skewed the questions were. Given the questions, it’s surprising there was not more support for Dodd-Frank and the CFPB.
Consider the question that resulted in the 74 percent support Dodd-Frank figure:
Now please listen to this description of the Wall Street Reform law that was passed after the financial crisis. In addition to requiring federal oversight of a larger range of financial companies, this law also prohibits banks from certain risky practices, and created the Consumer Financial Protection Bureau to fight against abusive financial practices that hurt consumers. It also bans taxpayer-funded bailouts of large banks and financial companies and, instead, sets up a system where investors rather than taxpayers bear the losses of bank failures. Please tell me whether, overall, you favor or oppose this law.
No more taxpayer-funded bailouts? No more socialized losses and privatized gains? Sign me up! I would love a law that does this. Except the very reason that many people, including me, oppose Dodd-Frank is because of the belief that it does just the opposite, that it entrenches the too big to fail concept and makes bailouts more likely down the road. The debate over Dodd-Frank is not pro-bailouts versus anti-bailouts, or pro-accountability for bad business choices versus anti-accountability. No one is advocating for bailouts or taxpayer-funded losses. The debate is over whether the particular provisions in Dodd-Frank are likely to lead to more bailouts or fewer, whether the law increases the chances of another crisis or decreases it.
This question also lobs a number of very nuanced and deeply controversial terms at the respondent – words like “risky” and “abusive” – with almost no context. What is the optimal level of “risk” for financial institutions, who should assess “riskiness” and how risk can be adequately hedged are questions at the core of ongoing debates over the cause of the 2009 financial crisis and future policy considerations. Labeling a set of practices as “risky” is conclusory and deliberately ignores any existing controversy.
The term “abusive” as used by the CFPB is even more controversial than the term “risk.” Fraud has been illegal in America since the colonial era. The Federal Trade Commission has had the task of policing “unfair” and “deceptive” practices since 1914. These terms are well understood in American law. But Dodd-Frank, in creating the CFPB, charged the new agency with a new mission: protect consumers from practices that are not only “unfair” or “deceptive,” but also “abusive.” What is an “abusive” practice? What is an example of a practice that is neither “unfair” nor “deceptive” (i.e., where the consumer is not misled or deceived) but is nonetheless “abusive.” The question that resulted in a 77 percent approval rating for the CFPB is no better. It reads:
The Consumer Financial Protection Bureau, or CFPB, is the first federal agency whose focus is protecting consumers when they use mortgages, credit cards, bank accounts, and other financial products and services. Its mission includes preventing deceptive, unfair and abusive lending and collection practices by banks and other companies. From what you know about the Consumer Financial Protection Bureau, or CFPB, would you say you favor or oppose the CFPB?
Once again, sounds great. Fighting deception and abuse? Love it. But of course, methods matter. Suggesting that the debate over the CFPB is between those who are for abusive practices and those who are against them is simply disingenuous. I am profoundly concerned about the CFPB, its structure, and its approach to its mission. I believe the term “abusive” is vague and gives the CFPB unnecessary and unprecedented latitude, which has led the CFPB to itself behave in a manner that is abusive to Americans. But I am not in favor of abuse. Quite the opposite.
To the extent that the results of this poll are held up as proof that the American people support Dodd-Frank, the CFPB, or any of the policies the poll claims to examine, this proof is weak stuff. The questions gloss over the true debate, and therefore fail to accomplish the poll’s purported goal of uncovering Americans’ opinions on these issues. In court, I would claim the questions are leading the witness. Here I will simply claim that the questions are misleading.