BROADCASTS.com

Special guest Alex J. Pollock, Senior Fellow with the Mises Institute and former Principal Deputy Director of the Office of Financial Research in the U.S. Treasury Department, joins us to discuss his recent blog post published on The Federalist Society website in which he urges Congress to look into the question of whether the Federal Reserve can lawfully continue to fund the CFPB if (as now) the Fed has no earnings. We begin with a review of the Supreme Court\u2019s recent decision in CFSA v. CFPB which held that the CFPB\u2019s funding mechanism does not violate the Appropriations Clause of the U.S. Constitution. Alex follows with an explanation of the CFPB\u2019s statutory funding mechanism as established by the Dodd-Frank Act, which provides that the CFPB is to be funded from the Federal Reserve System\u2019s earnings. Then Alex discusses the Fed\u2019s recent financial statements and their use of non-standard accounting, the source of the Fed\u2019s losses, whether Congress when writing Dodd-Frank considered the impact of Fed losses on the CFPB\u2019s funding, and how the Fed can return to profitability. We conclude the episode by responding to arguments made by observers as to why the Fed\u2019s current losses do not prevent its continued funding of the CFPB, potential remedies if the CFPB has been unlawfully funded by the Fed, and the bill introduced in Congress to clarify the statutory language regarding the CFPB\u2019s funding.

Alan Kaplinsky, Senior Counsel in Ballard Spahr\u2019s Consumer Financial Services Group, hosts the conversation.