The People’s Watchdog

July 11, 2017

One of President Obama's first-term signature accomplishments was the creation of the Consumer Financial Protection Bureau (CFPB), charged with making "consumer financial markets work for consumers, responsible providers, and the economy as a whole." In essence, a watchdog for the people.

"The Consumer Financial Protection Bureau (CFPB) is a 21st century agency that helps consumer financial markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives."

The concept of the consumer agency was first introduced by Elizabeth Warren in her 2007 article,"Unsafe at Any Rate." Then a Harvard Law School professor, Warren later led the fight for creation of the CFPB in 2010 under the Dodd-Frank Wall Street Reform and Consumer Protection Act

Elizabeth Warren's "Mortgage and a Toaster" Analogy (click!)

Although slated to be it's first director, Warren opted instead to challenge Republican Senator Scott Brown for the Massachusetts Senate seat that once belonged to Senator Ted Kennedy. 

Now the Ranking Member on Financial Institutions and Consumer Protection Subcommittee in the US Senate, Warren works closely with current CFPB Director Richard Cordray.

An early target for elimination, Donald Trump issued the Presidential Executive Order on Core Principles for Regulating the United States Financial System on February 3rd, aimed at rolling back an "unaccountable and unconstitutional new agency that does not adequately protect consumers."

Despite the fact that the five-year old agency, under Cordray's leadership, has returned nearly $12 billion to 29 million Americans, the Trump Administration wants to cut, if not eliminate, the agency.

Funding for the CFPB comes from the Federal Reserve and is capped at 12% of the Federal Reserve's yearly operating expenses. Despite the fact that funds do not come from congressional appropriations, bills have been introduced in the Senate by Ted Cruz (R-Tx) and in the House by Congressman John Ratcliff (R-Tx) to Repeal CFPB by eliminating Title X of the Dodd-Frank Act, which created the Bureau.

Results for Consumers
CFPB Accomplishments:

  • Reduced $7.7 billion in consumer debts while winning $3.7 billion in compensation for consumers.
  • Benefited 50 million households from new CFPB 

    CFPB Director, former State Treasurer and Attorney General from the state of Ohio, Richard Cordray

    mortgage servicing protections.
  • Uncovered deceptive banking practices at Wells Fargo Bank defrauding millions of customers, leading to full refunds and a $100 million penalty.
  • Provided $130 million in due compensation to service members, veterans, and their families that were harmed by illegal private sector predatory practices.
  • Visited more than 145 military installations, handling over 71,000 consumer complaints from service members and their families, and advised DOD on better rules to protect service members from financial exploitation.
  • Through the Credit Card Accountability, Responsibility and Disclosure (CARD) Act, reined in late fees credit cards, limited predatory practices targeting young consumers on college campuses, curtailed sharp interest rate hikes, and made credit card costs more transparent, saving consumers more than $16 billion in undisclosed fees.
  • In 2016 fined car makers Honda and Toyota over $21 million each for practices that led minority borrowers to pay higher interest rates than white borrowers for auto loans.
  • For every $1 of funding, it has returned approximately $5 to victims of wrongdoing.
  • 1.1 million customers served thus far.
  • Over 97% of complaints get sent to companies in a timely manner

According to a July 15th poll by Lake Research/Chesapeake Beach Consulting, 81% of Democrats and 59% of Republicans view the Consumer Financial Protection Bureau favorably.

Links:
Consumer Financial Protection Bureau
Join Americans for Financial Reform 

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Kimberly Scott
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Sources:  The American Prospect, CFPB

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