Office of Financial Research – An Unconstitutional Agency

Are you familiar with the Office of Financial Research? You may not be, but I hope I can change that. Over the past couple of weeks, we have highlighted examples of wasteful spending and how a bloated federal government leads to a situation where no one has control over how our tax dollars are spent. Oversight in these cases has been severely lacking and I am of the opinion that this is a direct result of our federal government being so overgrown. It is a case of the left hand not knowing what the right hand is doing and it goes completely against the way our government is designed to work. One of the things that needs to be strengthened is congressional oversight of the Executive Branch, but we seem to be moving in the other direction.

Remember the government agency I mentioned in the first paragraph? The Office of Financial Research is newly created, a child of Dodd-Frank and housed under the auspices of the Treasury Department. Fox News calls it the most powerful government agency you have never heard of. Here is its proposed mission.

The agency’s official mission is to collect financial data and funnel it to another Dodd-Frank creation: the Financial Stability Oversight Council. These agencies were designed with the idea of preventing another systemic shock of Lehman Brothers magnitude.

Toward that end, OFR was invested with virtually unlimited subpoena power. It can compel just about any company in America to turn over to the federal government sensitive internal data, even proprietary information.

Office of Finanacial REsearchIs it just me, or does it seem that our government is fixated on collecting all kinds of data? There appears to be a belief that a financial crisis can be averted, if only enough data is available for processing. You’ll have to forgive me for being more than a little skeptical. Do they really think they could have prevented the subprime mortgage crisis that imploded the housing market in 2008?

Moving on from that rabbit trail, let’s look at another concern that is arising over the Office of Financial Research. As with any government agency, money is the key and this new agency is no different. However, it has at least a couple of steps on its fellow agencies. Do you realize that its budget does not come from Congress? Instead, it has heretofore came from the Federal Reserve. Wait, it gets worse. Starting in July, it will receive its funding entirely through assessments. For the unlearned masses who may read this, that translates into taxes.

There are a couple of problems with the way Dodd-Frank set up the Office of Financial Research, of unconstitutional proportions. First of all, the money that originally funded the agency came from the Federal Reserve. The last time I checked the Constitution, it should have been appropriated by Congress. Article 1, Section 9, Clause 7 of the Constitution reads as follows.

No money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.

I wonder where they draw the authority to bypass Congress and give money directly to the Office of Financial Research? I would really like to hear their explanation of that, but I fear it will be sorely lacking.

Second, and possibly more troubling, is how things will change in July. The Office of Financial Research will be assessing fees on some of the companies they are supposedly overseeing. Any bank-holding firm with consolidated assets of $50 billion will be subject to those fees/taxes. My problem with that again lies in the Constitution, specifically Article 1, Section 8, Clause 1.

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

If these two examples do not make Dodd-Frank a direct violation of the United States Constitution, then someone will have to explain it, in detail.

I am of the opinion that Dodd-Frank is unleashing a government monstrosity upon the American landscape. It completely bypasses the authority of Congress, as set forth in the Constitution. Beyond that, it is granting unprecedented authority to the government agencies it has created. To put it simply, we have members of the federal government, both in the Executive and Legislative branches, who are willing to bypass the Constitution, all in the name of consumer protection. It is a power grab by the Executive Branch, enabled by the Legislative Branch. Congress willingly gave up its constitutional authority. To a government agency with little to no oversight, no less. It is a particularly egregious example of why our federal government needs to be taken back to the basics of the Constitution.

Linked at The Lonely Conservative.

About LD Jackson

LD Jackson has written 2020 posts in this blog.

Founder and author of the political and news commentary blog Political Realities. I have always loved to write, but never have I felt my writing was more important than in this present day. If I have changed one mind or impressed one American about the direction our country is headed, then I will consider my endeavors a success. I take the tag line on this blog very seriously. Above all else, in search of the truth.

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10 comments to Office of Financial Research – An Unconstitutional Agency

  • A bureaucratic tower of Babel…

  • Syrin

    So much for the myth that the Federal Reserve is a private institution. Yet the most recent example of the Constitution being used as toilet paper by the regressives and the march to tyranny so sought after by the regressives.

    • Thanks for commenting on Political Realities, Syrin. I appreciate you taking the time to do so.

      You are right about the way the Constitution is being used. It is shameful, to say the least.

  • Both Parties are statist in nature. Congress votes on laws they don’t read. If they do read them, they only think about the prolem they are trying to solve and pay no attention to the potential for abuse these laws present. We have become a nation of irresponsible people being lead by even more irresponsible leaders.

  • This is what happens to a nation in decline Larry. When the institutions and traditions that made us great are not longer respected or even followed, we end up with language in a law that is the antithesis of both.

    • That is exactly what is happening. Our nation is a far cry from what it used to be. Our Constitution is being ignored on a daily basis and Congress doesn’t seem to care that Obama is doing his best to cut them completely out of the loop that is supposed to be our government.

  • Market Conservative

    Larry,

    You ask, “I wonder where they draw the authority to bypass Congress and give money directly to the Office of Financial Research? I would really like to hear their explanation of that, but I fear it will be sorely lacking.”

    They got that authority from Congress. Congress gave it to them, by drafting and passing legislation. The legislation drafted and passed by Congress empowers the Federal Reserve to fund for a short time the OFR, and later for OFR to collect, through an assessments process, the funds necessary to pay for its expenses. The Constitution does say that the appropriations power rests with Congress. It doesn’t say that everything has to pass through the General Fund. It definitely doesn’t say that Congress can’t direct an agency other than the IRS to collect taxes.

    That explanation isn’t good enough for you?

    It’s not remotely unconstitutional. If you have a problem with Federal agencies collecting fees to fund themselves from the companies they deal with, rather than generally drawing on taxpayer money, then you also have a problem with the FDIC. And the FHFA. And the Farm Credit Administration. And the National Credit Union Administration. And Medicare. And Medicaid. And Social Security. And so on…

    Sincerely,
    Market Conservative

    • Congress had no right to willingly abdicate their authority to oversee the fiscal actions of our country. That is what they did by “authorizing” the Office of Financial Research to spend money as they see fit.

      For the record, I do have a problem with a lot of federal agencies. They deal with things they should be staying out of, which increases government control. That is almost never a good thing.


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