Wall Street reform turns 7 years old and its precocious centerpiece Consumer Financial Protection Bureau turns 6 tomorrow Friday, July 21. Established after the 2007-2008 economic collapse to help prevent another crisis by making consumer markets safe, the new Consumer Bureau’s record of significant achievements continues to grow even as Wall Street, the House majority, some of the Senate majority, the new administration and even payday lenders and debt collectors escalate their attacks on it. The latest attacks include attempts to eviscerate it through the budget process (the House Financial Services and General Government Appropriations bill recently sent to the floor even incorporates most of the controversial, retrograde Wrong Choice Act).
It makes no sense to weaken or even eliminate a transparent, 21st century agency whose successes have given consumers renewed confidence that the financial marketplace is being cleared of tricks and traps.
It makes no sense to forget, or ignore, the lessons of that 2007-2008 collapse that caused millions to lose homes, millions more to lose jobs and millions more ordinary Americans to lose trillions in critical retirement savings.
It makes no sense to unchain Wall Street fewer than 10 years after its recklessness led to the still-simmering Great Recession.
It makes no sense for the Congress to ignore the general public’s strong bipartisan support for continued Wall Street oversight and a strong Consumer Bureau (latest Americans for Financial Reform (AFR) poll July 2017).
Of course, Wall Street has lubricated and influenced the political process with billions of dollars of campaign donations and lobbying expenditures since 2008, hoping to “delay, defang, defund” and ultimately repeal the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act that established the CFPB and other reforms to protect the economy. In the 2015-2016 election cycle alone, the financial industry spent over $2 billion (in smaller numbers, that’s $2.7 million per day or $3.7 million per member of Congress) in efforts to return us to an era where misguided deregulation amplified by a culture of greed and recklessness allowed Wall Street’s self-anointed “masters of the universe” to run amok over laws, consumers, depositors, small investors and taxpayers.
In particular, it makes no sense to turn the Consumer Bureau into an “unrecognizable husk” incapable of continuing to police financial markets and keeping them safe for consumers, as the House-passed Wrong Choice Act and numerous other bills under consideration are designed to do.
Let’s look at some highlights of the CFPB’s tremendous body of work, in just six years so far:
- This month, it finalized a hard-fought rule to give consumers back their rights to band together to take corporate wrongdoers to court. The CFPB arbitration rule prohibits financial firms from including class action bans in arbitration clauses in small-print, take-it-or-leave-it financial contracts to open bank accounts or obtain credit cards. Wall Street – backed by the litigious (on its own behalf) U.S. Chamber of Commerce — has already vowed to kill this important rule. Disappointingly, Senator Mike Crapo (ID), Banking Committee chair, has joined the Congressional Review Act effort to repeal the important noripoffclause rule.
- CFPB has returned nearly $12 Billion in restitution and other relief to over 29 million consumers harmed by unfair financial practices. It has fined wrongdoers – from banks and credit card companies to debt collectors and credit bureaus — hundreds of millions more in over 180 enforcement actions.
- Last September, CFPB imposed a record penalty of $100 Million on Wells Fargo after a joint investigation with other regulators found that the bank’s frontline staff had been forced to open millions of fake accounts to meet unreasonable sales goals imposed by executives.
- In October, the CFPB announced a rule to give prepaid card holders consumer rights similar to those credit and debit card holders have had for decades. (Demonstrating its flexibility to address legitimate industry concerns, CFPB is now making small modifications to the rule.) In February, CFPB fined the prepaid RushCard parent company UniRush and Mastercard a total of $10 million for a 2015 debacle that left tens of thousands of cardholders without use of their own money or access to support for weeks.
- In January, the CFPB sued the nation’s largest student loan servicer, Navient, and two of its subsidiaries for systematically “failing” student borrowers at every stage of the repayment process.
- Here is a list of all CFPB enforcement actions, including numerous others in 2017.
- The CFPB has handled over 1.1 million consumer complaints (here’s where you or anyone can file a complaint). Problems with debt collectors – including “you’re wrong, it’s not my debt” – lead the complaint parade. About 800,000 of those complaints have already been posted in its transparent public consumer complaint database. Consumers, researchers and competitors can review the database to gain insights into how markets work. PIRG has released ten reports in a continuing series on the complaint system and database, which the CFPB continually upgrades to make the complaint process more effective for both consumers and companies. In particular, the CFPB’s 2015 decision to add optional complaint narratives (stories) to the database has made the database a richer source of marketplace analytics. Our latest of the ten reports, released in June, documented complaints by military servicemembers and veterans.
- The CFPB’s Office of Servicemember Affairs has worked alongside the Pentagon to protect servicemembers and veterans from financial fraud. In addition to harming those who serve, financial fraud hurts credit reports; credit problems are the leading cause of revocation of security clearances, which harms the nation’s unit preparedness.
- In addition to the Office of Servicemember Affairs, the CFPB maintains offices for Students and young consumers, for Older Americans and for low-income and economically vulnerable consumers, an Office of Financial Empowerment.
- The CFPB’s educational resources include “Know Before You Owe” self-help guides for people preparing to buy homes or take out student loans as well as excellent workbooks for service organizations helping consumers with debts or to set budget and savings goals (any consumer will benefit from checking out the training resources available).
- The CFPB has completed numerous other rules to protect consumers, including a major Dodd-Frank Act Title XIV package against the mortgage origination, servicing and foreclosure schemes that worsened the Great Recession. In progress is another major rule to regulate predatory small dollar payday and car title lending.
It makes no sense to weaken or eliminate the CFPB, unless you are Wall Street or some of its even more tawdry wingmen – from predatory payday lenders to debt buyers – all looking to trample laws, consumers, depositors, small investors and taxpayers.
For the rest of us (and that’s nearly all of us), it makes no sense to weaken or eliminate the CFPB. It’s the first government agency with just one job – protecting consumers by making the financial marketplace fair – and it’s been wildly successful in just six short years. Don’t let Wall Street and its wingmen convince Congress and the administration to take this tough, but fair, consumer cop off the beat. The idea of the CFPB needs no defense, only more defenders. You can become one by liking or sharing and using the hashtag #DefendCFPB.
Senior Director, Federal Consumer Program, PIRG
Ed oversees U.S. PIRG’s federal consumer program, helping to lead national efforts to improve consumer credit reporting laws, identity theft protections, product safety regulations and more. Ed is co-founder and continuing leader of the coalition, Americans For Financial Reform, which fought for the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, including as its centerpiece the Consumer Financial Protection Bureau. He was awarded the Consumer Federation of America's Esther Peterson Consumer Service Award in 2006, Privacy International's Brandeis Award in 2003, and numerous annual "Top Lobbyist" awards from The Hill and other outlets. Ed lives in Virginia, and on weekends he enjoys biking with friends on the many local bicycle trails.