The Consumer Financial Protection Bureau (CFPB) is definitely the new kid on the block, as far as regulators go. It has some pretty powerful enemies, including the predictable Goldman-Sachs-JPMorganChase-Citibank-BankofAmerica-Wells-Fargo of the too-big-to-fail/too-big-to-jail swagger.
When the foreclosure crisis was starting, circa 2008 and 2009, causing apocalyptic shock waves in my state, Arizona, among many others, I started to seeing a tidal wave of potential clients seeking help with their rapidly dying mortgages, home values, and incomes. In our initial naiveté, we wrote to the appropriate regulators for the designated bank. For example we wrote to the OTC or the OCC, depending upon whether it was a federal savings bank or a “national association” we were grappling with. The letters and responses from these revolving door regulators (as in revolving door between high-paying jobs at the banks being regulated and the government jobs as regulators, with all yellow brick roads seemingly leading to Covington & Burling and their ilk) were lacking. The responses were anemic, one-pagers, of the learned helplessness variety.
Snap to the creation of the CFPB, born of Sen. Elizabeth Warren’s (then Law School Dean Warren) pragmatic idea to have a regulator focused toward helping the consumer, rather than the bank. She posited an agency with a direct line to the consumers it purported to help, with a user-friendly web site, with non-legalese communication, with an easy way to file on-line complaints that were actually addressed, and with actual Rule-Making Authority to effect regulations and guidelines for the heavies of the consumer protection statutes, such as the Real Estate Settlement Procedures Act (RESPA), the Truth in Lending Act (TILA), the Fair Debt Collection Practices Act (FDCPA) and the Dodd-Frank Amendments to parts of these federal consumer-protective statutes.
The CFPB actually became involved in writing amicus curiae (friend of court) briefs for various issues wending their way through the state and federal courts of appeal.
Former Attorney General of Illinois, Richard Cordray took over this agency.
Since inception, the CFPB has issued plain guides, and has pretty much done what is said it would do, which is advocate as the regulator for the actual group of people these consumer-protective laws are supposed to protect, the consumer.
What a subversive idea in the post-2000 world where up became down, and down was up, and the regulators were captured by their subjects who they deemed “clients,” right? To have a regulator actually regulating the banks? The horror.
And the CFPB has been under attack ever since by its well-heeled critics. The audacity of this strapping young upstart, to upend the billionaire boys’ clubs “ways of doing things.” Who did this Eliot Ness kid think he was?
And the fear-mongering continues to ratchet up, with the CFPB getting lip service at the Republican debates.
From the LA Times article here:http://www.latimes.com/business/la-fi-lazarus-20150918-column.html
Despite the ominous, fearful and largely bogus criticism by its Republican critics, the bureau has been steadily doing what it was created to do: safeguarding consumers from the greedy practices of businesses that think they can act without regard for the law.
Last week, the bureau announced a crackdown on the nation’s two largest debt buyers — companies that purchase uncollected debt for pennies on the dollar and then try to squeeze payments from consumers by threatening lawsuits and damage to credit ratings.
One of the companies, Encore Capital Group, is based in San Diego. The other, Portfolio Recovery Associates, has its headquarters in Norfolk, Va.
Richard Cordray, the bureau’s director, said the two companies bought thousands of consumer-debt accounts “that they knew or should have known were inaccurate or could not legally be enforced” because the files lacked required documentation.
Nevertheless, he said, the companies filed lawsuits against people “knowing that they would win the vast majority of the lawsuits by default when consumers failed to defend themselves.”
Thanks to the bureau’s investigation, Encore now will refund consumers up to $42 million, stop its collection of $125 million in questionable debts and pay a $10-million penalty.
Portfolio Recovery Associates will refund about $19 million, halt collections on $3 million in dubious obligations and pay an $8-million penalty.
Both companies also are prohibited from collecting any debt they can’t verify and from suing anyone without full documentation related to money owed.
“Consumers have the right to expect that they will be told the truth and treated fairly,” Cordray said.
Does that sound like an agency run amok? Or does it sound like a much-needed overseer for financial firms that, all too often, demonstrate their unworthiness of public trust?
. . .
In the four years since its founding, the Consumer Financial Protection Bureau has, among other actions:
•Forced credit card companies to return nearly $2 billion to consumers who were duped into signing up for costly add-on programs such as unneeded identity theft or disability coverage.
•Required that mortgage lenders verify in advance that a borrower can repay a loan. The subprime mortgage crisis during the Great Recession was precipitated in part by lenders irresponsibly handing out cash to almost anyone who applied.
•Helped secure $480 million in debt forgiveness for students saddled with high-priced loans from Corinthian Colleges Inc. For-profit Corinthian filled for Chapter 11 bankruptcy protection in May and closed dozens of schools.
•Created a database of consumer complaints intended to highlight and resolve ongoing problems. Debt collection, credit reporting and mortgages have drawn the most complaints and, as of last month, the most-complained-about companies were Equifax, Experian and Bank of America.
“The Consumer Financial Protection Bureau is the little agency Wall Street banks and debt collectors love to hate because it works for consumers, not them,” said Emily Rusch, executive director of the California Public Interest Research Group.
“For the first time, we have an agency that’s looking out for our interests instead of the banks’ interests,” she said.
A key focus for the bureau these days is payday lending. It has proposed federal rules that would limit the interest rates payday lenders can charge, prohibit borrowers from taking out more than one loan at a time and require lenders to assess borrowers’ ability to pay.
Oh, the nerve of that CFPB. How dare it just saunter into the country club, clearly not belonging, clearly an outsider, coolly order an Arnold Palmer, and proceed to do its job?
If you don’t believe me, go check out this rogue agency’s completely transparent web site, at cfpb.gov and check out its nefarious doings. If you still don’t believe me, check out the Reports of the Special Inspector General for the TARP’s web site, another agency that actually tells it like it sees it, even if Treasury doesn’t like it, and Treasury refuses to follow its guidelines.
See if you can suss out the real threat to consumers. Hint: it ain’t transparency. Also, perhaps the consumers themselves are not so mentally impaired that they cannot accurately report their experiences in programs such as HAMP, and HARP, and HAMP SQUARED, and HARP DEUCED, and other risky games of chance dreamed up by the Treasury to “foam the runway” for the Goldman-Sachs-JPMorganChase-Citibank-BankofAmerica-Wells-Fargo Goliath. Just so there’s something to balance against the “self-reporting” of the loan servicers that are often either subsidiaries or just loyal minions and courtiers of the GSJMChase-CIT-BANA-WF beast.
You figure it out.
And remember, if a politician starts spouting about getting rid of the CFPB while shoring up the NSA and other agencies that are quite expensively spying on and collecting data non-voluntarily on innocent American citizens, some little alarm might bleep in your brain. Go look up that politician’s principal donors. Don’t be deterred by the vague, patriotic-y, maverick-y sounding names either. Don’t let yourself be totally “Citzens-United”-ed. A Potemkin village does not stand up against a little scratching of the surface. It will fall down like a cheap Our Town dinner theatre set.