Consumer Protections in Jeopardy

The Consumer Financial Protection Bureau (CFPB) was spawned by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Proving the federal government could manage the internet, it was rolled out in 2011 with a well-planned, functioning web site at which the Affordable Care Act could only turn green with envy. Consumers who had issues with financial institutions including banks, payday lenders, foreclosure relief companies, debt collectors and any number of other money related companies–especially those who primarily dealt with poorer citizens in dire need of financial assistance, could, as individuals, contact the CFPB site and have their concerns reviewed and possibly find relief through the CFPB providing clout against large, moneyed institutions that any individual could not get a hearing. Along the way the bureau has returned $12 billion to over 29 million consumers from financial institutes due to illegal banking activity in the last seven years.

The CFPB has been the champion of the “little guy” against the behemoth financial industry. One of their most notable achievements was to stifle Wells Fargo when they were illegally creating accounts between 2011 and 2016 for their customers without permission or knowledge. Customers found the accounts when they began piling up fees for the unauthorized services. Wells Fargo was fined $185 million, CFPB’s largest assessment to date. Part of CFPB’s mission from the onset was to make “rules more effective by consistently and fairly enforcing those rules.”

The agency has been controversial from the beginning, mostly because the financial lobby and big banking didn’t like the new sheriff in town monitoring their activity. The bureau was the brainchild of Elizabeth Warren, then a Harvard Law School professor. The Republicans made their first mistake concerning the bureau by making it clear that President Obama could not get Warren confirmed as director. Instead, he nominated Richard Cordray. If the GOP had simply let Dr. Warren run her pet project, she likely would have been satisfied helping common citizen consumers who had been done wrong by banks, and never run for the Senate. They blocked her, she ran, she won, she persisted, and has been a thorn in their sides ever since–big mistake.

Mr. Cordray was controversial from the beginning too, due to his tough stance on bank regulations. He faced stiff opposition in the Republican congress and it took until 2013, two years after his nomination, to be confirmed. Corday served until November, 2017 when he resigned with plans to challenge in Ohio’s next governor’s race. While relinquishing his appointment, he tried to elevate his assistant to acting director, but Donald Trump had other ideas. He decided to appoint Mick Mulvaney, who is also serving as Office of Management and Budget Director, to the post. Mulvaney now has two titles and has left the CFPB with a part-time, acting director. Part-time work at full-time jobs does not seem to be an issue in this administration.

Acting Director Mulvaney’s initial announcement to the members of the bureau was that he was not there to shut-down the agency. However, his formal request for funds to operate CFPB for the next year is zero dollars. He also changed the mission statement from one that focuses on enforcing laws to, “regularly identifying and addressing outdated, unnecessary, or unduly burdensome regulations.” In short, he wants no funding and to deregulate the laws CFPB was strictly enforcing. Actions speak louder than words–Mulvaney wasn’t being truthful to his subordinates when he came on board as part-time, acting director. Their days may be numbered. And, so may be the days of individual, citizen consumers having a government agency specifically designed to support their financial grievances against Wall Street perpetrators.

Here’s an example of how the focus has already shifted from the consumer’s welfare to that of focusing on the financial corporations. Richard Cordray initiated restrictions on payday loan shops that were to go into effect this year. Those restrictions addressed the amount of interest a payday loan company could charge a client who is borrowing money, short term, to run their household. Payday loans are a 3.6 billion-dollar annual business. The Trump administration is overturning those regulations to allow 300% APR interest rates and in some cases the rate can reach 1,000% due to taking away more modest roll-over loan limits. Also gone will be application restrictions designed to be sure the borrower can reasonably be able to repay in a timely manner. Desperate, poor workers fearing repossession or eviction are being taken advantage of by greedy, high cost, short-term lenders. Corday tried to mitigate the long-term damage that could be done to these families, but the Trump administration is willing to feed them to the sharks–the legally operating loan sharks. These are the kinds of complaints that typically come to the CFPB from consumers being gouged in their times of extreme need.

The scene is now common and predictable. From the new tax law; the healthcare insurance rollbacks, including Medicare and Medicaid; the proposed changes to Social Security; and now the muting of the Consumer Financial Protection Bureau, it is clear that the current administration is focused on getting every possible penny out of the lower income half of the country and using it to line the pockets of corporate America and the royal class that runs those companies and the economy.

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