It is becoming increasingly more common for the corporate media to pay attention to the dollar’s dying status as the world reserve currency. The media can no longer realistically ignore developments that ultimately chip away at the dollar piece by piece considering Russia, China, and Iran have become brazen about their intentions to erode the dominant currency in the not-too-distant future.
While Anti-Media has documented the decline of the dollar throughout the course of the year as a result of a number of significant geopolitical decisions, there is still one major elephant in the room that needs to be addressed. Once it is, it should shed some light on just how detrimental these recent developments are to America’s status as the global authority. Continue reading →
So what would you miss if the agency suddenly disappeared or got gutted?
In short, a lot. We base this conclusion on the work the three of us have done in recent decades. One of us (Sovern) has been writing about consumer law for more than 30 years, while the other two of us direct a legal clinic that represents elderly consumers. We’ve seen the worst of what financial companies can do, and we’ve also witnessed how the CFPB has begun to reverse the tide.
Life before CFPB
If you are one of the more than 29 million consumers who have collectively received nearly US$12 billion back from misbehaving financial institutions because of the CFPB’s efforts, you already know its value. But even if you are not, you have probably benefited from the bureau’s existence.
Before Congress created the bureau, there was no federal agency that made consumer financial protection its sole mission. Rather, consumer protection was rolled into the missions of a bunch of different agencies. And, as we saw during the financial crisis, regulators often gave it a back seat.
The Office of the Comptroller of the Currency regulates banks but was so preoccupied with ensuring lenders were safe that it failed to protect consumers from their predatory subprime mortgages – so much so that it prevented states from doing so too. And now President Trump has put a former bank lawyer in charge of it. The Federal Trade Commission, which is tasked with fighting deceptive business practices, lacked the power to prevent such dangerous lending.
This meant consumer protection on financial matters fell through the cracks.
But as early as 2010, before the CFPB was set up, regulators at the OCC were increasingly aware of what was happening at Wells Fargo thanks to hundreds of whistleblower complaints. The OCC even confronted the bank, yet failed to take any action despite many red flags, according to an internal audit.
Besides protecting consumers, however, Congress had a second motive in creating the bureau: to help prevent the kind of mortgage lending that helped cause the Great Recession.
To that end, the bureau has adopted rules that help consumers to understand their mortgages – something that often wasn’t possible under the previously misleading mortgage disclosures. It also issued regulations to prevent consumers from taking out mortgages that they couldn’t repay. And after borrowers take out a mortgage, CFPB servicing rules establish the procedures servicers must follow when communicating with borrowers, correcting errors, providing information and dealing with loan modification requests.
Two of us have personal experience with one of the bureau’s new mortgage rules, which powerfully illustrates the value of the CFPB.
In 2014, Alice, a client of our law school clinic, was struggling to pay the mortgage on her home – which she had refinanced a few years earlier – after a stroke forced her into retirement. Our clinic helped her apply for a modification of her loan.
But within weeks, instead of acknowledging Alice’s application, the loan servicer summoned her to court to begin foreclosure proceedings in violation of CFPB servicing rules. Fortunately, our clinic was able to rely on those rules in getting the foreclosure action dismissed. Alice got her loan modified and remains in her home.
Protecting the vulnerable
This reveals how the bureau is particularly important to protect vulnerable consumers, like the elderly, who are frequently targeted by fraudsters and predatory lenders because of their cognitive and other impairments and because they often have accumulated substantial assets. The CFPB is the only federal agency with an office specifically dedicated to protecting the financial well-being of older adults.
The House of Representatives has passed a bill that would cripple the CFPB by, for example, taking away the power it used to fine Wells Fargo for opening illegal accounts and concealing its complaint database from public view. In other words, it would force the bureau to sit idly by as financial institutions lie to consumers. Even if the bureau survives, it may be less protective of consumers when its current director, Richard Cordray, leaves. His term expires next summer, and he may step down even sooner. Then we might see a former banker or bank lawyer put in charge, just as has happened at the Treasury Department and comptroller’s office.
Nearly every American has or will have a loan or bank account, a prepaid card, credit card, a credit report or some combination of those, and so has dealings with a financial institution policed by the CFPB. But few of us read the fine print governing these things or can understand it when we do. That gives the companies that write these agreements the ability to draft them to suit their own interests at the expense of consumers.
Similarly, we do not always know when a financial institution takes advantage of us, just as Wells Fargo customers did not always know that it had opened unauthorized accounts that lowered their credit scores.
Consumers need protection from misbehaving companies. If the bureau is eliminated, significantly weakened or starts protecting banks rather than consumers, all consumers will suffer.
This is an updated version of an article originally published on July 10, 2017.
Along with three co-authors, Jeff Sovern received a $29,510 grant from the American Association for Justice Robert L. Habush Endowment and by a grant from the St. John’s University School of Law Hugh L. Carey Center for Dispute Resolution in 2014 to study arbitration. It resulted in an article. Along with Professor Kate Walton, he received a grant from the National Conference of Bankruptcy Judges Endowment for Education to study debt collection, resulting in another article. He is a member of the National Association of Consumer Advocates.
Ann L. Goldweber is affiliated with NACA as a member.
Gina M. Calabrese is affiliated with the National Association of Consumer Advocates, New Yorkers for Responsible Lending, and the Association of the Bar of the City of New York (former chair, Committee on the Civil Court).
Vice President Mike Pence presiding over the Senate on Capitol Hill in Washington, Tuesday, Feb. 7, 2017, during the Senate’s vote on Education Secretary-designate Betsy DeVos. On Tuesday night, Pence returned to the chamber again to a break another tie. This time it was to make sure it’s easier in the future for financial service companies and other Wall Street darlies to make it easier to rip-off consumers. (Photo: Senate Television)
While in the end it was two Republicans, Sens. Lindsey Graham of South Carolina and John Kennedy of Louisiana, who joined with Democrats and the Senate’s two Independents in voting against the resolution, Pence broke the 50-50 tie in order to scrap the rule. Continue reading →
Dickinson, TX — Government suppression of free speech can take many forms. It’s not always censorship in the media or storm troopers in the streets bashing in the heads of protesters. For proof of this, one need look no further than Dickinson, Texas.
The small coastal town southeast of Houston took some of the worst Hurricane Harvey had to offer, with almost 7,400 homes damaged — many of them beyond repair. In response, the city council decided to set up a relief fund. People can donate to the city, and then a committee distributes the money to residents on a case-by-case basis. Continue reading →
“Congress created the loopholes in our tax code that allow offshore tax avoidance and force ordinary Americans to make up the difference,” the new study observes. (Photo: Michael Fleshman/Flickr/cc)
As President Donald Trump and the Republican-controlled Congress intensify their push for massive corporate tax cuts that critics have said would encourage businesses to offshore profits and jobs, a new report published Tuesday by U.S. PIRG and the Institute on Taxation and Economic Policy (ITEP) found that 73 percent of companies on the Fortune 500 list are already taking advantage of overseas tax havens—costing the United States $752 billion in federal tax revenue last year alone.
The new study discovered that, in total, America’s most profitable corporations in 2016 had $2.6 trillion stashed overseas in over 9,000 subsidiaries in various locations, including notorious tax havens like Bermuda and the Cayman Islands.
Clark Gascoigne, deputy director of the Financial Accountability and Corporate Transparency (FACT) Coalition, cautioned in a statement on Tuesday that the Trump-GOP tax proposals would, if passed, make this bad situation even worse.
“As Congress considers proposals to institute a near zero percent tax rate on profits booked offshore by multinational corporations, the findings in this report should give policymakers pause,” Gascoigne said. “The study shows that today’s flawed tax system allows for gaming on a grand scale.”
The PIRG-ITEP analysis makes clear that corporate tax avoidance is both an unnecessary problem—”Congress created the loopholes in our tax code that allow offshore tax avoidance and force ordinary Americans to make up the difference”—and a pervasive one.
At least 366 of the 500 companies on Fortune’s list “operate one or more subsidiaries in tax haven countries.” Furthermore, “30 companies with the most money officially booked offshore for tax purposes collectively operate 2,213 tax haven subsidiaries.”
But the report also highlights the fact that there are several “particularly egregious examples”:
Apple, which “holds at least $246 billion offshore, a sum greater than any other company’s offshore cash pile,” would owe $76.7 billion in U.S. taxes if this profit was not overseas;
Citigroup, which stashes $47 billion overseas, would owe $13.1 billion in U.S taxes; and
Nike, which holds $12.2 billion offshore, would owe $4.1 billion in U.S. taxes.
Richard Phillips, a senior policy analyst at ITEP, argued that in the face of these numbers, Congress should be looking to close loopholes that allow businesses to offshore profits on an enormous scale, not open them even further, as Trump and the GOP have proposed.
“Lawmakers shouldn’t be discussing how to sweeten the pot and give corporations a huge tax break that amounts to a huge financial reward for engaging in bad corporate behavior,” Phillips said.
The PIRG-ITEP analysis outlined several steps that could be undertaken by lawmakers in the place of their attempts to slash taxes, gut the safety net, and further incentivize offshoring.
“To end tax haven abuse, Congress should end incentives for companies to shift profits offshore, close the most egregious offshore loopholes, strengthen tax enforcement, and increase transparency,” the study concluded.
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 License.
“It is despicable that Equifax would exploit consumers’ need for identity theft monitoring to avoid accountability for this devastating breach,” said Amanda Werner, arbitration campaign manager at Public Citizen and Americans for Financial Reform. (Photo: GotCredit/flickr/cc)
Not only did Equifax suffer a massive data breach that potentially compromised the personal data of up to 143 million in the U.S. and then wait 6 weeks to inform the public—the credit-reporting company is directing those who want to know if they were a victim of the breach to a service that forces them into a “rip-off clause” that makes them give up their right to file or join class-action lawsuit against the company.
Robert Weissman, president of advocacy group Public Citizen, called it “one of the most brazen corporate wrongdoer maneuvers in memory.” Continue reading →
Venezuelan President Nicolas Maduro said Thursday that Venezuela will be looking to “free” itself from the U.S. dollar next week, Reutersreports. According to the outlet, Maduro will look to use the weakest of two official foreign exchange regimes (essentially the way Venezuela will manage its currency in relation to other currencies and the foreign exchange market), along with a basket of currencies.
According to Reuters, Maduro was referring to Venezuela’s current official exchange rate, known as DICOM, in which the dollar can be exchanged for 3,345 bolivars. At the strongest official rate, one dollar buys only 10 bolivars, which may be one of the reasons why Maduro wants to opt for some of the weaker exchange rates. Continue reading →
Student debt in the U.S. has reached more than $1.3 trillion. The Department of Education recently announced it would not work with the CFPB to hel students with complaints about their student loan servicers. (Photo: Tom Woodward/Flickr/cc)
Calling the move “outrageous and deeply troubling,” consumer advocates and opponents of skyrocketing student debt spoke out Tuesday against the Trump administration’s decision to end the working relationship between the Department of Education and the government watchdog tasked with helping oversee the federal student loan program and protect borrowers.
At the direction of Congress, under the Dodd-Frank financial reform act, the Department of Education has shared information with the Consumer Financial Protection Bureau (CFPB) since 2011 in order to provide assistance to borrowers with complaints about Federal student loans. But the Department, now run by Secretary Betsy DeVos, informed the Bureau in a letter last week that it was ending the relationship.Continue reading →
The RAA and REINS Act could impact federal agencies’ ability to impose regulations affecting food safety, among other issues that affect Americans. (Photo: Oregon Department of Agriculture/Flickr/cc)
The environmental group Clean Air Moms Action released a new ad campaign Monday urging voters to fight back against two pending Republican anti-regulation laws.
The ad is being run in five states where Democratic incumbent senators will be up for re-election in highly-anticipated races in 2018. It features car safety advocate Janette Fennell, who shares a personal story of how an automobile regulation saved her life—the kind of regulation that could be at risk if Congress passes the Regulatory Accountability Act (RAA) and the Regulations from the Executive in Need of Scrutiny (REINS) Act. Continue reading →
Consumer Financial Protection Bureau architect Sen. Elizabeth Warren (D-Mass.), seen here in 2016, said the new rule from the agency “will allow working families to hold big banks accountable when they’re cheated.” (Photo: New America/flickr/cc)
A new rule by a federal watchdog—hailed as having “paramount importance” for protecting consumers from Wall Street predators and curbing corporate abuses—is under direct attack by Republicans just days after being issued.
The rule from the successful and broadly-supported Consumer Financial Protection Bureau (CFPB) bans companies from using mandatory arbitration clauses, which makes consumers give up their right to file or join class-action lawsuits. In other words, it blocks “rip-off clauses” that are “a fine-print trick that banks and predatory lenders use to evade accountability and conceal illegal behavior,” as advocacy group Public Citizen put it, noting that they are also used by many corporations. Continue reading →