Financial CHOICE Act is a Cruel “Choice’ for Illinois Consumers

Consumer Advocates urge Reps Foster and Hultgren to vote No in Committee

Illinois PIRG

This morning, House Financial Services Chairman Jeb Hensarling (TX) is holding a mark-up on his so-called Financial Choice Act 2.0.  Two Illinois Members of Congress sit on the committee: Rep. Foster and Rep. Hutlgren.

“Illinoisans were hit hard by the financial collapse and now depend on the consumer protections the financial Choice Act would eviscerate,” said Abraham Scarr, Director of Illinois PIRG. “We strongly urge Rep. Foster and Hultgren, Royce to vote no.”   

The bill leaves consumers and our economy even more vulnerable to Wall Street’s recklessness than before the ’08 crisis by taking aim at all of the 2010 Dodd-Frank Act’s protections caused by unfair bank practices abetted by regulatory failures. In particular, the bill would gut the Consumer Financial Protection Bureau.

“It’s shocking that this bill is being seriously considered just 9 years after the second-worst financial collapse in our nation’s history,” continued Scarr. “The “Financial Choice Act is the wrong choice for California students, service members, veterans, and indeed all consumers.”

There are currently 27,937 Illinois complaints published in the CFPB’s public complaint database. 1187 complaints are against Wells Fargo. [1]

Recent data shows a critical need for the bureau to protect students. The CFPB’s latest report shows that student loan complaints in Illinois have surged 278 percent from last year at this time to this year, likely driven by publicity around its January enforcement action against servicing giant Navient. [2]

Christine Lindstrom, US PIRG’s Higher Education Advocate, said, “After suffering through years of predatory lending tactics, student loan borrowers finally have the CFPB in their corner.  Now Chairman Jeb Hensarling (TX) of the House Financial Services Committee is delivering a low blow by weakening the bureau’s power.”

“In just under 6 years, the nascent CFPB has restored order to financial markets torn asunder by a decade of weak regulation that emboldened corporate wrongdoers and led to the 2008 collapse,” said Ed Mierzwinski, US PIRG’s Federal Consumer Program Director.  “This reckless piece of legislation makes the wrong choice for consumers and the economy while Wall Street and predatory lenders cheer.”

The CHOICE Act eviscerates consumer protections by:

1. Reversing 150 years of federal policy, the bill eliminates independent funding for the CFPB by placing it under the politicized Congressional appropriations process, giving powerful special interests massive influence over regulation of our financial system and economy;
2. Neutering the director by allowing that he or she to be fired at will and moving the agency fully under the executive branch;
3. Terminating the CFPB’s UDAAP (Unfair, Deceptive, or Abusive Acts and Practices Authority) authority, limiting its ability to protect consumers and end dangerous practices;
4. Eliminating the CFPB’s supervisory authority over all banks greater than $10 billion in assets and returning that authority to the bank regulators that infamously ignored warning signs of or even encouraged dangerous practices that led to the 2008 financial crisis;
5. Eradicating the CFPB’s public consumer complaint database that forces wrongdoers to respond to consumer complaints;
6. Making the CFPB’s key offices, of Older Americans, Financial Empowerment, Service Member Affairs and Students “optional,” so a future anti-consumer director could simply eliminate them. The Office of Students has led the bureau’s lawsuit against Navient, the massive student loan servicer, and has also protected student victims of numerous failed for-profit schools 

The Choice Act also eliminates numerous important safety-and-soundness and investor protections also enacted in the Dodd-Frank Act after the 2008 collapse.

• Read U.S. PIRG’s Letter To U.S. House of Representatives opposing the Financial Choice Act 2.0.
• Read U.S.PIRG’s series of reports investigating consumer complaints in the CFPB consumer complaints database here for more examples of the CFPB’s effectiveness.

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[1] Search of CFPB database conducted at 9:25 am on May 2nd. https://data.consumerfinance.gov/dataset/Consumer-Complaints/s6ew-h6mp/data

[2] From “CFPB Monthly Snapshot Spotlights Student Loan Complaints,” found here: https://www.consumerfinance.gov/about-us/newsroom/cfpb-monthly-snapshot-… Illinois data on page 15