Inspector General Scrutiny Could Curb CFPB Overreach

Solveig Singleton

The Consumer Financial Protection Bureau (CFPB) is suffering a crisis of institutional trust. Its woes have included the adoption of questionable legal theories, shifts in policy without public comment, and sending out poorly justified subpoenas. Reformers wonder how to address this trust crisis, and one option that might help is more intensive scrutiny by an Inspector General (IG). 

Currently, the bureau shares an IG with the Fed. The draft CFPB Reform Act of 2026 would (among other reforms) give the bureau its own IG (as does H.R.2513). If lawmakers support rigorous IG evaluations of the bureau’s compliance with constitutional case law, with statute law, and with accepted standards for cost-benefit analysis, this type of measure could bolster the bureau’s accountability. 

IGs are government watchdogs, conducting independent audits, inspections, and evaluations to combat waste, fraud, and abuse. Many audits are focused on financial or information technology issues. IG reports on the bureau usually cover topics such as purchase card management, payments to contractors, data security, or the management of the civil penalty fund. While valuable, such assessments do not get at the heart of the CFPB’s overreach. 

However, IGs can delve more deeply into the quality or outcomes of an agency’s substantive policy work. For example, one IG assessed the quality of the SEC’s economic analysis in rulemakings. A specially appointed IG sharply critiqued American efforts to support a stable government in Afghanistan. A 2013 IG report noted concerns—echoed by an internal review—that the bureau’s practice of sending enforcement lawyers into supervision proceedings made supervisions more adversarial and inhibited communication. In 2014, an IG assessed the quality of the cost-benefit analysis the bureau conducted in considering the effects of its policies on small businesses. Still, IGs’ independence is somewhat limited by the need to get along with agency leadership, and IGs are often soft on the targets of their scrutiny. 

The 2017 IG review of the bureau’s issuance of civil investigative demands (CIDs) illustrates how these factors play out. First, the IG considered seven sample CIDs, reviewed petitions for relief from CIDs on the bureau’s website, and interviewed “several” bureau staff and some staff of other agencies. But there is no evidence that the IG communicated with the targets of the bureau’s CIDs. Second, the IG advised the bureau’s investigators to narrow the statements of purpose in the CIDs to help the recipient understand the nature of the investigation, inviting legal challenges. But generally, the IG focused on procedure more than substance and “did not seek to assess the adequacy of the notifications of purpose for the sampled CIDs.” 

In response, the bureau revised its manual to call for narrower CIDs but did not (judging by testimony received in 2025) much change the bureau’s actual CID practice. And the IG’s report did not quite capture the profound concerns with unjustified, overbroad, and burdensome CIDs described by many commentators in 2018.

Getting to the heart of the bureau’s problems would call for IGs with expertise in constitutional law, cost-benefit analysis, and statutory interpretation—as contrasted with expertise in accountancy, finance, information technology, or investigative procedure more ordinarily expected of IGs. The right IG could help clarify how to improve the CFPB’s complaint process. But IGs at the bureau would need to delve into substance and outcomes, not just procedure.

The bureau’s designers set out to insulate the bureau from Congress, but it is hard to see how insulation can ever be consistent with accountability. The right IGs could help. But even the most dedicated IG will struggle to bring about meaningful change unless other reforms—such as funding the CFPB from appropriations—are enacted to transform the dynamic at the bureau.