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When CFPB Director Richard Cordray announced his resignation two months ago, I warned it was time to say goodbye to the consumer protections he had built up over the past six years.
From student loans to mortgages to credit cards and basic checking accounts, the financial landscape had changed in many small ways for the better. Credit scores were becoming more fairly calculated, outrageous fees had been tamped down, misdirection on credit card terms was replaced with plain English, and more broadly banks were staying on their toes while avoiding ours.
We even briefly finally got the right to band together to sue our banks when they rip us off, and some much needed help on student loan forgiveness, before angry Republicans clawed it all back. And after a year of being cornered and hamstrung by a Republican Congress and a Trump presidency, Cordray threw in the towel to go somewhere he could still make a difference.
I knew everything was at risk. I just didn’t realize how quickly Trump would move to mark his territory. In just a little over a month since Cordray actually stepped aside, interim director Mick Mulvaney has…
- imposed a freeze on hiring and new rulemaking
- changed the mission statement to focus on addressing “outdated, unnecessary, or unduly burdensome” regulations instead of pursing fair (a word which was removed entirely) enforcement of consumer finance law
- postponed implementation of rules on prepaid cards and new penalties against mortgage lenders for “material” errors in mortgage data
The focus has shifted entirely from helping consumers understand and guard their money to making business less pesky for big banks. It’s disgusting, and as Senator Elizabeth Warren said, “disgraceful.”
What’s unnecessary is deregulation
What Trump should be worried about is unduly burdening voters, not bankers.
Since its inception, the CFPB has returned about $12 billion to consumers who were ripped off by the financial industry through unfair fees and accounts they simply didn’t sign up for even as those same banks reaped record profits.
They’re not hurting for it. They don’t need a champion. They need oversight to make sure the people that aren’t too-big-to-fail can succeed. Pushing consumers back into forced arbitration agreements and high-interest payday loan cycles, and stripping the basic protections credit and debit card users have from prepaid card users, isn’t going to be good for anyone.
And these rules weren’t developed in a vacuum, or in a rush, or in secret, as the sham Republican tax bill was — the CFPB spent years developing them in plain sight and soliciting feedback from the financial industry. Throwing them out is not simply spurning Obama, it’s disrespecting the entire regulatory process and sowing confusion about where things will go next.
Will they ping-pong every time there’s a new Congress, or is an agency that is supposed to be independent going to be allowed to do its job?
While there’s an ongoing legal challenge to Mulvaney’s authority from Leandra English, Cordray’s hand-picked successor, it’s likely to be moot. Trump is already considering several potential nominees to permanently head the CFPB, despite having hundreds of more pressing vacancies left over from the drunken stumbling that was his first year in office.
Trump doesn’t really seem to know how to create anything, but he’s very efficient at tearing down. And he’s going to have most of this year to do it, even if he doesn’t get any further help from a Republican Congress more worried about re-election.
Come next year, though — if Democrats seize either chamber of Congress, and if Richard Cordray succeeds in his bid to become governor of Ohio — there may be a chance to preserve whatever’s left and start rebuilding.
Let’s just hope Trump doesn’t trigger a recession when consumers can least afford it.
Article last modified on January 12, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: What’s Already Changed at the CFPB - AMP.
Article last modified on January 12, 2018. Published by Debt.com, LLC .