While informed critics and experts say they are now “running out of adjectives to describe how horrible” the GOP’s House and Senate tax plans are, the evidence continues to mount showing the manner in which the party’s overall approach is a gift to the rich and corporations at the expense of low- and middle-income families, millions of whom who will see their taxes actually go up while key social programs like public education, Medicare, Medicaid, and Social Security will face massive cuts.
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).
The third anniversary of the the disappearance of the 43 Ayotzinapa Rural Teachers’ College students (known as normalistas) in Iguala, Guerrero, Mexico has come and has brought new developments with it.
Forensic Architecture, a London-based agency that conducts research on behalf of international prosecutors, human rights organizations, and political and environmental justice groups, has reconstructed the events of Sept. 26 and 27, 2014, which is presented as a forensic tool for parents, investigators and the general public to further the investigation. The interactive platform depicts a vivid account showing federal and state police agents in the vicinity at the moment when 43 students disappeared from Iguala. Continue reading →
“Neil Gorsuch knows where his bread is buttered,” notes Ian Millhiser of ThinkProgress. (Photo: Cleanup Carl/Twitter)
Protestors gathered outside Trump International Hotel in Washington Thursday as Supreme Court Justice Neil Gorsuch delivered the keynote speech at an event hosted by a right-wing advocacy group—a move critics argued crosses fundamental ethical boundaries, given that the venue is currently the subject of numerous emoluments lawsuits that could soon reach the Trump-appointed judge’s desk.
“By headlining this event, Gorsuch will personally enrich the very man who appointed him to his lofty position,” notes Ian Millhiser of ThinkProgress. “And he will enable the very mechanism that allows Trump to profit off the presidency.” Continue reading →
Trumpcare may be dead again (for a while at least) on Tuesday, but Republicans now want to get serious about what they call “tax reform,” but which critics are resolute in saying is just a major push to give the nation’s corporation and wealthiest individuals another massive giveaway they don’t need and certainly don’t deserve.
A day ahead of the Trump administration’s scheduled release of what it says will be a “detailed” tax plan, progressive policy groups are again warning the American people not to be fooled by rhetoric as they highlight estimates showing the likely proposal will cost the government trillions of dollars in revenue over the next decade and lead the way towards massive cuts in key social programs that help insulate low-income and working Americans from an economy already “rigged” in favor of the wealthy and powerful. Continue reading →
Hundreds of immigration rights activists gather on June 1, 2017 in front of the White House to denounce the immigration crackdown by the Trump Administration. (Photo: Stephen Melkisethian/flickr/cc)
Dozens of people were arrested Monday morning for blocking the federal building housing the Immigration and Customs Enforcement (ICE) office in Hartford, Connecticut to denounce the deportation of a couple that’s lived in the U.S. for over twenty years.
Meriden couple Giaconda and Franklin Ramos, who came to the U.S. from Ecuador in 1993 and have no criminal record, are scheduled to board a flight back to their home country on Sept. 29.
Demonstrators sat on the ground blocking the entrances and held banners reading “Keep the Ramos family together” and “ICE stop your ethnic cleansing.” They, along with other demonstrators gathered to the side of the entrances, chanted “Not one more.” Continue reading →
Protesters left signs outside the Department of Education on Thursday as Secretary Betsy DeVos announced she would open a comment period before rolling back Title IX guidance. (Photo: @gregpiper/Twitter)
Advocates for sexual assault survivors criticized the Trump administration’s announcement on Thursday that it would roll back Obama-era guidance on campus assault.
As dozens of protesters gathered outside to demand continued protections for survivors, Education Secretary Betsy DeVos said in a speech at George Mason University that the administration will begin a public comment period as it restructures its sexual assault policy—but she made clear that she would not uphold the previous administration’s guidance. 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 →
Five years ago, Silicon Valley was rocked by a wave of “brogrammer” bad behavior, when overfunded, highly entitled, mostly white and male startup founders did things that were juvenile, out of line and just plain stupid. Most of these activities – such as putting pornography into PowerPoint slides – revolved around the explicit or implied devaluation and harassment of women and the assumption that heterosexual men’s privilege could or should define the workplace. The recent “memo” scandal out of Google shows how far we have yet to go.
It may be that more established and successful companies don’t make job applicants deal with “bikini shots” and “gangbang interviews.” But even the tech giants foster an environment where heteronormativity and male privilege is so rampant that an engineer could feel comfortable writing and distributing a screed that effectively harassed all of his women co-workers en masse.
This is a pity, because tech companies say they want to change this culture. This summer, I gave a talk at Google UK about my work as a historian of technology and gender. I thought my talk might help change people’s minds about women in computing, and might even help women and nonbinary folks working at Google now. Still, the irony was strong: I was visiting a multibillion-dollar tech company to talk about how women are undervalued in tech, for free. Continue reading →
“We’ve been known, historically, to welcome the stranger and offer refuge to persecuted individuals.” YES! Illustration by Jennifer Luxton.
After two hours of public testimony, Ralph Nava was the last of 60 speakers to testify in favor of the Santa Fe City Council’s resolution to reaffirm and strengthen its welcoming policies toward immigrants. As a native of northern New Mexico whose family’s presence in the region dates back generations, he implored the audience and council members to consider the history. “All of this area was Mexico just a few generations back,” Nava said. “All of a sudden, we’re trying to make all of these artificial barriers and walls that don’t make sense.”
He went on to tell a story about taking his grandmother to Mexico. On their way back over the border, she kept telling the U.S. border agents she was Mexican even though she had lived her entire life in New Mexico. “She wouldn’t say she wasn’t Mexican,” laughs Nava, who insists that for her, it was not a symbolic stand. “She genuinely thought of herself as Mexican.” Continue reading →