Inside Financial Services

The CFPB’s Very First Boondoggle

As spending on the agency's new HQ skyrockets, there's nothing Congress can do. The shape of things to come.

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Regular visitors to this site will know that, even among the more wretched, overreaching regulatory agencies that Congress has created through the years, the Consumer Financial Protection Bureau stands out as a particular abomination.The agency is supposed to “protect” consumers from unscrupulous financial institutions, but almost surely the effect it will have instead, once it starts writing its rules and conducting its audits, will be to make credit more expensive and harder to get for those very same consumers. Worse, the agency is essentially unaccountable to elected officials. It is funded directly from the Federal Reserve’s annual surplus, rather than appropriation from Congress. And the agency’s director can’t be fired by the president or anybody else. So Congress has created a bureaucracy that can do whatever it wants without any real oversight. As I say, an abomination: the CFPB is an affront to the idea of a democratically elected representative government.Given all this, I can’t decide whether to laugh or cry over the news the agency has already let the budget for the renovation of its Washington headquarters spiral out of control.The numbers aren’t small, either: The original renovation budget was $55 million. By last July, that had risen to $95 million. More recently, it’s ballooned to $139 million, or $316 per square foot. That is an enormous amount of money. To put it in perspective, the Treasury inspector general estimates that the outright value of the property being renovated (1700 G Street NW) is just $154 million. Local real estate experts tell the Washington Examiner that the typical cost to renovate Class A office space in Washington D.C. is $150 per square foot.The CFPB is spending more than twice that. As Rep. Jeb Hensarling commented to CFPB head Richard Cordray at a hearing in late January, you can build Trump Tower for less.Put aside, for a moment, the irony that an agency created to help people better manage their money is making a hash of its own finances. (Is there really no one at the CFPB with expertise in budgeting and project management?) More to the point, now that the CFPB has let one of its first major projects careen out of control, what can Congress do to prevent future agency fiascoes? Well, basically nothing. The agency’s head can’t be removed, remember, and its funding can’t be cut. All Congress can do is call Cordray before a few hearings and ask him a few questions. In the meantime, I suppose there’s nothing to prevent the agency from spending $500 per square foot if it wants.I’m no unbiased observer, but I don’t see how this mess can be taken as a promising start for the agency. It would appear Congress has created a regulator almost purposely designed to create mischief. This headquarters mess, I fear, is a sign of things to come.What do you think? Let me know!

8 Responses to “The CFPB’s Very First Boondoggle”

  1. jsc173

    I visited their headquarters two years ago and would judge the quality as “B”, compared to the average bank they were very similar. I shudder to think what it look like when they’re done. Maybe someone should remind them what many thrift COS did in the 80s, when they built gilt-edged everything only to see it auctioned off a few years later. Sad.

  2. Ole

    Yes, let us leave the banksters alone. They are so wonderful and public minded!,,

  3. Dick McKnight

    Mr Cordray embarrassed himself last evening on Jeopardy with some of his answers. One of the questions regarded soft brown coal. His answer was anthracite, the hardest coal. there were others. The mistake was no congressional or executive branch control. What were they thinking.

  4. Constructor

    After reading the scope of the renovations being done to the building, i.e. new elevators, new windows, new roof, new electrical, new AC, new plumbing, and assuming this is being done throughout the entire building, the cost will be considerable. Keep in mind, this is in addition to the standard office building installation which usually does not include the aforementioned work. That said, when all this work is completed, I will venture to say the building will be worth one and a half to two times the present estimated value of $154 million. I don’t make these comments off the top of my head but based on 48 years in commercial real estate and construction.

  5. Stays72

    Tom,
    If you want to compare credit availability and cost between the last ten years and the next ten years, I’ll take any bet you want that credit will only get better in the future. The last ten years, brought to you by your coveted bankers at Goldman, Chase, JP Morgan and others, were a credit disaster. Availability? Nearly zero. And you have the gall to suggest that regulation will make matters worse. Worse for whom? The bankers you so readily kneel before? Making claims about credit performance that have no bearing with reality is what you are good at, and the bankers enjoy playing you as their pawn. Is it as good for you as it is for them?

  6. SW Pilgrim

    This is news? Same-old,Same-old. The Washington Post might report it somewhere between the horoscopes and comics.

  7. rivvir

    I could ask, “is little bushie still in office?” but i won’t. Jack’s obviously all knowing that it’s the dems only who overspend, so no matter. This is gvt, but it’s also corporate. You don’t think the ibm’s of the world put expensive junk into their own offices, spending shareholder money on it? This is America. We little guys can’t even begin to comprehend the waste in the corporate world, the type you write about for gvt and, to your credit, sometimes about the corporate, in your pieces. I wonder though. How much have you sunk into your own office, Tom? Or did you go utilitarian? Utilitarian is for us plebes sitting out in front, not for your type.

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