At least Obamacare comes at us head on. The greater legislative threat may be the one that most Americans have never heard of. Economist Scott Powell and Acton friend Jay Richards explain in a new piece in Barron’s:

While Obamacare received more attention, the Wall Street Reform and Consumer Protection Act, also known as Dodd-Frank after its Senate and House sponsors, … unleashed a new regulatory body, the Consumer Financial Protection Bureau, to operate with unprecedented power.

Dodd-Frank became law in 2010 and is supposed to avert the next financial crisis. Yet banks are still too big to fail and Fannie Mae and Freddie Mac remain wards of the state, while the CFPB has been given sweeping authority over consumer credit and other financial products and services that played no significant role in the crisis of 2008.

Powell and Richards then offer some specifics:

The bureau wields a variety of enforcement tools and sanctions, such as “cease and desist” orders that can be imposed without giving time for targets to appeal. For those who knowingly violate a law or rule, the CFPB can impose penalties of up to $1 million per day, with the ability to demand “reimbursement” for the costs of enforcing the penalty.

The CFPB is reversing decades of cooperation and the presumption of good faith between financial institutions and regulators, turning bank examinations into prosecutions.

The new bureau is taking part in drafting some of the 400 rule-makings required by Dodd-Frank, and in rewriting existing rules that have been successfully enforced by seven other agencies. Exposing so many rules to creative regulators will create confusion and uncertainty, especially since the new rules can flout existing precedent and interpretations by the other federal agencies. The likely result: higher costs, less credit, jobs not created, and a recession without end.

It gets worse:

The 2008 collapse and government seizure of Fannie and Freddie, with some six million related foreclosures, should have curbed politicians’ appetite for compelling banks to lend to risky borrowers. But the Consumer Financial Protection Bureau has begun coercing banks to lend and underwrite mortgages to unqualified minorities. The CFPB is even extending its new regulatory authority to the consumer credit bureaus by requiring new scoring models for blacks and Hispanics that boost their relative standing.

The bureau is the first regulatory body to use social media to post unverified consumer complaints on its Website. A complaint at the Better Business Bureau is damaging, but the effect of hundreds of complaints posted on “an official Website of the U.S. Government” can be ruinous. Such complaints are raw meat to lawyers trolling for the next class-action lawsuits. The CFPB should not be a conduit for Democratic party funding and payback to lawyers who are big contributors.

The piece concludes with suggestions for killing the beast:

In the short run, the Senate can hamstring the agency by summarily rejecting the recess appointment of Director Richard Cordray during the next session of Congress.

But challenging Dodd-Frank’s constitutionality — as is being done in a federal suit filed in June — is the best defense for the long term. It should be clear to some court that the CFPB lacks the checks and balances required by the separation-of-powers clause.

Most other independent federal agencies are governed by bipartisan commissions and funded by Congress. The CFPB, in contrast, confers power on a single director for a five-year term and dodges the usual congressional oversight. The bureau is funded by, and located inside, the Federal Reserve, yet outside the review of either the Fed or Congress.