Four years out from the passage of Dodd-Frank it is pretty clear that the bill did not lead to an fundamental restructuring of our financial system, as many had hoped. The too-big-too-fail Wall Street banks are bigger than ever and operating pretty much as they always did. Many of the highest earners in the country are still traders, hedge fund, and private equity types who are quite adept at shuffling paper, even if it provides no service to the productive economy.

There is one important gain that can be identified from Dodd-Frank: the creation of the Consumer Financial Protection Bureau (CFPB). The importance of the CFPB was demonstrated clearly last weekend in a New York Times article on abuses in the subprime auto loan market.

The article documented practices that were reminiscent of the abuses of the housing bubble years. Lenders were filling in phony income numbers to allow borrowers to get loans for which they would not otherwise qualify. They would list higher interest rates and sometimes a higher loan amount that what had been agreed to with the borrower. They would also tack on fees and charges that had not been clearly disclosed. The result is that many borrowers end up losing their cars and also end up with a big strike on their credit record.  

These abuses testify to the importance of the CFPB because they are occurring in the one major area of consumer lending explicitly excluded from the CFPB. Auto loans were stripped out of the CFPB's jurisdiction by an amendment proposed by Representative John Campbell (R-CA), a former used car dealer. The amendment passed with several Democrats joining the Republicans to secure a majority.

The striking part of this picture is that the abuses are occurring where the CFPB is not operating, as opposed to the sectors of the consumer market where it does have jurisdiction. This demonstrates both that the CFPB has been effective where it is allowed to operate and, that in the absence of a serious policing presence, the financial industry has not changed its behavior.