Over the weekend President Trump fired the first salvos of deregulation aimed squarely at one of the Obama administration’s creations: The Consumer Financial Protection Bureau. Other than having a name that indicates it protects you, what else do you know about it?
Briefly, the CFPB was a direct result of the 2008 financial crisis. President Obama wanted a watchdog agency to protect consumers from the perils of the banking industry and keep an eye on Wall Street. The bureau has an executive director who is appointed to a five-year term, thus working “independently” of politics.
Last week, director Richard Cordray (a Democrat) stepped down. That move rushed forward Trump’s plans to dismantle the agency he calls “a complete disaster.” Now he is out to rein it in. You know what? He is right.
Protecting you from this “consumer protection bureau” sounds like a contradiction — but only if you believe this bureau actually does what it was created to do.
Where did it go wrong?
On a philosophical note, I understand how a bureau created for protection can seem like a great idea. It’s the mindset Democratic strategists and government workers thrive on: “even if it doesn’t work correctly, it’s better than nothing.” But by that logic we would still get around by zeppelin.
Outside of the Wells Fargo fines for creating phony accounts, there hasn’t been too much to tout.
There’s plenty to scoff at. Consider the arbitration rule proposed by the bureau without Congressional approval. It would have made it easier for you to sue credit card companies and banks in class-action suits. Sounds good. Let’s look closer — because no one really benefits from this.
According to the Treasury Department, over the next few years this would result in 3,000 additional class-actions suits. That would force businesses to pay an estimated $500 million to lawyers.
Consider that in 87 percent of these cases, only the people who actually start the lawsuit, if anybody, gets any meaningful settlement: Who actually wins? Simple, that is $500 million to the lobby formerly known as The Trial Lawyers Association.
Why would an Obama-era bureau want this? Not for you. For the lawyers, who donate heavily to the Democratic Party. C’mon: Deep down you know the CFPB isn’t about you.
The CFPB’s cracked down heavily on banks, and truly hurt the small banks and lenders.
I don’t know how many times I have to remind people that small banks are the backbone of rural America. You may not care, but a sizable chunk of the country — small businesses — does their borrowing on Main Street.
But the CFPB doesn’t answer to Congress, it works within its own rules. That includes a time-honored tradition in the bureaucracy: Spending useless tax dollars on things you don’t actually need to protect consumers, like a renovated luxury office building.
Why you should want to shake up the CFPB
If you don’t care that millions of dollars have been wasted by this bureau or that in seven years the biggest victory it points to is the Wells Fargo fine, that’s OK.
While Democrats argue the agency keeps tabs on Wall Street, the fact is it’s crushing us back home.
The regulations have cost community banks and credit unions billions. That’s bad for a number of reasons.
First, the burden on small banks has made it difficult to stay open. (I mentioned previously that in my hometown they’ve been eaten alive. ) Those banks in your town with money invested in the community are feeling the crunch worse than any Wells Fargo.
How many people does that affect? It’s more than you think — it could be you. In Indiana, for example, that is 2.3 million people with their finances tied up locally. The local ability to loan is waning.
That’s the messed up part. This agency created to watch Wall Street has devastated Main Street. During Cordray’s time it’s only moved to cover more ground in the banking landscape.
This isn’t to say we shouldn’t have any banking regulation. But let’s be reasonable.
Lift certain regulations and help Main Street. Sure Wall Street benefits too, but if that’s the price to help out local lenders, just deal with it. (If the bureau really is set up to police the banks, then it shouldn’t need more regulation to do that. Enforce what’s on the books.)
It sounded great in theory: a bureau to protect consumers from fraud. To an extent it has tried to do that. But when those efforts start to infringe on how we lend locally? That’s bad.
When the only people benefiting are lawyers and big banks, who is this really protecting? It looks like the CFPB is really only concerned with staying in business.
It’s time for a bureaucratic shake-up. Who will protect you from over-protection? President Trump.
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Article last modified on December 22, 2017. Published by Debt.com, LLC . Mobile users may also access the AMP Version: Trump Wants to Protect You From Consumer Protection — And You Will Thank Him - AMP.
Article last modified on December 22, 2017. Published by Debt.com, LLC .