Tag Archives: Republican Party

Why we need to save the Consumer Financial Protection Bureau

This article was originally published in TheConversation.

Senator Elizabeth Warren has faced battles with Republicans since the CFPB was created. Image via YouTube screen shot.

Republicans in Congress and the White House have been very blunt about their desire to gut the Consumer Financial Protection Bureau – and the threats to it are mounting.

The agency was launched in 2011 in the aftermath of the financial crisis as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The goal was to protect consumers from deceptive or misleading practices in the financial industry.

At the moment, Republicans seem focused on blocking CFPB rules they don’t like, such as one that would have prevented the use of arbitration clauses in financial contracts, making it easier for people to band together to sue banks for wrongdoing. Separately, the Trump administration has been heavily critical of the CFPB, and its director is said to be considering leaving before his term expires next July, which would allow the president to pick his replacement.

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.

John Stumpf, far left, lost his job as CEO of Wells Fargo as a result of the scandal over fraudulent accounts. Reuters/Gary Cameron

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.

Congress, for example, gave the Federal Reserve the power to bar unfair and deceptive mortgage lending in 1994. Yet the central bank considered consumer protection a backwater and didn’t use that power until 2008 – too late to prevent the Great Recession. Congress took it away two years later when it passed Dodd-Frank.

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.

Wells Fargo’s recent fraud scandal is a case in point. In the early 2000s, Wells Fargo employees began opening fake accounts in clients’ names without permission, leading in some cases to lower credit scores and a variety of fees. The bank ultimately opened millions of fraudulent bank and credit card accounts before the scheme came to an end last year.

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.

It wasn’t until the Los Angeles city attorney and the CFPB became involved years later that Wells Fargo took forceful action to stop the fraud. The regulators fined Wells Fargo a total of $185 million and forced it to refund fees it had charged customers and hire an independent consultant to review its procedures.

More importantly, they sent a clear message to other financial institutions: Cheat consumers and you will face the consequences.

Consumer Financial Protection Bureau Director Richard Cordray testifies on Capitol Hill in 2013. AP Photo/Manuel Balce Ceneta

Protecting consumers

Since its inception, the bureau has acted repeatedly to stop financial institutions from harming consumers.

It blocked debt collector attorneys from suing consumers based on false information. It discovered systemic problems with consumer credit reports and forced companies to correct errors. It compelled credit card companies to refund illegal fees. It protected borrowers from unlawful student loan servicing practices. It made lenders repay consumers they discriminated against. It recovered money for veterans who complained of abusive financial practices.

When the bureau began publishing consumer complaints on its website, companies that might previously have ignored negative feedback paid attention. Financial institutions have responded to complaints to the CFPB more than 700,000 times, often by providing a remedy to the consumers.

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.

Demonstrators tried to draw attention to the subprime mortgage crisis back in early 2008. AP Photo/Matt Rourke

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 bureau has brought cases against companies that attempted to take advantage of seniors by, for example, misrepresenting the interest rates on pension advance loans or deceptive advertising. In 2015 alone, consumer complaints to the CFPB brought relief to more than 600 older Americans just through debt collection problems.

The bureau has also worked to prevent financial abuse of the elderly, estimated to cost seniors as much as $36 billion annually. The CFPB has educated financial institutionsnursing facilities and others about recognizing and stopping elder financial abuse and exploitation.

Consumer protection in peril

Given Alice’s ill health, the consequences for her might have been disastrous if she had been thrown out of her home. But now she – and all of us – face the loss of the CFPB’s aid.

The CFPB is under attack from Republican members of Congress who believe more in lifting bank regulations than in protecting consumers. Some members have proposed eliminating the agency altogether.

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.

About the Authors:

Disclosure statement

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).

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Virginia GOP Rebuked for Casting Democrat as “Race Traitor” Over Statue Stance

State Republican Party accused Lt. Gov. Northam of betraying “his heritage”

By Julia Conley, staff writer for Common Dreams. Published 8-24-2017

Virginia Lt. Gov. Ralph Northam, right, revealed in June that his ancestors had been slaveowners. (Photo: VCU CNS/Flickr/cc)

Virginia’s Republican Party was under fire Thursday after posting on its official Twitter account an accusation that Democratic gubernatorial nominee Ralph Northam had “turned his back” on his heritage by supporting the removal of Confederate monuments. Continue reading

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Biologists Warn Half of All Species to Face Extinction by 2100, as GOP Pushes to Destroy Protections

Days after Republican lawmakers speechified about dismantling the Endangered Species Act, biologists ring alarm bells about global mass extinction

By Nika Knight, staff writer for Common Dreams. Published 2-27-2017

The endangered black-footed ferret is one of many species afforded protections under the 1973 Endangered Species Act. (Photo: J. Michael Lockhart/U.S. Fish & Wildlife Service/flickr/cc)

Today, 20 percent of all species are at risk of being wiped out, scientists at a Vatican conference on biodiversity warn, and that number may rise to nearly 50 percent by the end of the century.

“The living fabric of the world […] is slipping through our fingers without our showing much sign of caring,” warned the conference organizers.

Biologists, ecologists, and economists traveled to Rome from around the world for the workshop titled “How to Save the Natural World on Which We Depend,” which begins Monday, to strategize together on how to limit the mass extinction event caused by rampant over-development, climate change, overpopulation, and unsustainable agricultural practices. Continue reading

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The Manchurian President

A classic Hollywood political thriller may tell us more about what’s happening in America than any history book.

By Neal Gabler. Published 2-22-2017 by BillMoyers.com

Opening scene from The Manchurian Candidate. Photo: YouTube

As the Trump presidency unravels, unraveling the country along with it, there is no real political antecedent, no lessons from American history on which to draw and provide guidance. We are in entirely uncharted waters.

But there is an antecedent in our popular culture that provides a prism through which to view the contemporary calamity, especially the alleged collusion between Trump’s henchmen and Russian intelligence to deny Hillary Clinton the presidency. I am not the first observer who has noted the relevance of the movie The Manchurian Candidate. But the relevance is more than skin or celluloid deep. It goes to the very heart of this bizarre and frightening political moment. Continue reading

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On Verge of Trump Era, Republicans Push New Laws to ‘Chill Protest’ Nationwide

Republican legislators are proposing laws that would criminalize nonviolent protest in North Dakota, Minnesota, Michigan, Washington, and Iowa

By Nika Knight, staff writer for Common Dreams. Published 1-19-2017

Republican lawmakers around the country are pushing legislation that would criminalize and penalize nonviolent protest, apparently anticipating an upswell of civic engagement during the coming Trump administration.

Spencer Woodman reported at The Intercept Thursday on the anti-protest bills proposed in Iowa, Michigan, Minnesota, Washington, and North Dakota.

“Over the past few weeks, Republican legislators across the country have quietly introduced a number of proposals to criminalize and discourage peaceful protest,” Woodman wrote. Continue reading

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Conservatives Plot Their Course on the Rising ‘Sea of Red’ in State Capitals

Meeting in private, enthused activists promise that the growing Republican dominance in state government will unleash a wave of laws to cut business taxes, restrict unions and expand school privatization.

By Robert Faturechi, Pro Publica. Published 1-7-2017 by Common Dreams

The Kentucky State Capitol. Photo: Seifler (Own work) [CC BY-SA 3.0], via Wikimedia Commons

Shortly after the November election, with the nation’s political attention focused on the Trump transition, an influential advocacy group met outside Washington to discuss how to leverage the extraordinary shift of power to Republicans in the rest of the country.

The American Legislative Exchange Council — a nonprofit better known as ALEC — briefed its members and allied groups on the bright future for its agenda now that Republicans will effectively control 68 of the nation’s 99 state legislative bodies, as well as 33 governor’s mansions. Among other things, group members said they would push bills to reduce corporate taxes, weaken unions, privatize schooling and influence the ideological debate on college campuses. Continue reading

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Leave your Conscience and Morals at the door

Campaign fundraising is as dirty a game as politics itself. Anyone and everyone can be bought and sold for the right price. It starts with the insistent fundraising calls.

By Gretschman for Occupy World Writes

Call center agent. By FiveOne51 (Own work) [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons

Call center agent. By FiveOne51 (Own work) [CC BY-SA 3.0], via Wikimedia Commons

Last night at 8:30 PM the house phone rang. Yes, some of us still have those old fashioned contrivances in our domiciles. The caller wished to speak with my father who has been dead for over 3 years. My wife asked who was calling. The caller identified himself as a solicitor for the Republican Party of Minnesota. Since we have both asked the Republican party solicitors many times to remove this name and phone number from their call lists because they are asking for a DEAD person, my wife asked for the solicitors’ supervisor to be put on the line. I took the phone, and after about two minutes “Josh” came on the line.

I asked “Josh” if he was a volunteer, or if he was paid to solicit for the Republican party. He said that he was indeed paid, and he was sorry to have troubled us, he would remove the diseased’s name and phone number from their records and that the Republican Party of Florida would not call us again. I asked him WHY the Republican Party of FLORIDA would be contacting people in Minnesota to solicit funds. I asked him WHERE he was calling from.

At this point “Josh” admitted that he had misunderstood where his solicitor was calling, he thought it was Florida, when in fact it was Minnesota, because they were soliciting funds for Stewart C. Mills III to wage a campaign against incumbent Rick Nolan in the 8th District of Minnesota. Mills ended up losing to Nolan in 2014.

“Josh” said that he was employed by a call center for the Republican Party based in Mankato Minnesota.  Once “Josh” assured me yet again that his call center would not call our number again, I thanked him for that courtesy and my wife and I started researching what we would find out to be some startling truths about political fund raising -American style.

We first located the call center in Mankato, Minnesota. it is one of many businesses located in a multi-use building in the college town of Mankato. We did enough research to find out that the business “FLS Connect” has four call centers. One in St Cloud, Minnesota, one in Phoenix, Arizona, one in Springfield, Missouri and the one that we had contact with in Mankato. FLS Connect’s co-founder Jeff Larson, is a Karl Rove protege.

Being a call center solicitor for FLS Connect is a good job if you want to make ten dollars an hour and you have a criminal record as a felon. if you aren’t so good at persuading people to part with their money, you can become a “supervisor” who handles the actual credit card transactions of the money solicited by the people doing the solicitation. item of note though -“supervisors” at this company only receive nine dollars an hour. Our research into what current and former employees said about their workplaces was very eye-opening. One of the people reviewing the business said that it was a “great” job as long as you left your ‘conscience and morals’ at the door when you came to work. Another onetime employee stated that they were instructed not to let the person being solicited from off the line until a donation is made. The average length of employment at this business was less that two months.

The next thing we researched was why the scion of the Mills Fleet Farm chain of stores would need to have the Republican Party solicit donations on his behalf. During his 2014 race against Nolan, he said, “I will be playing a role in my campaign financially.” The Mills family recently sold out their family business to the tune of 1.2 billion dollars to the a “leading global investment firm, KKR, [who] manages investments across multiple asset classes including private equity, energy, infrastructure, real estate, credit and hedge funds.” It would seem that a political candidate might not need money from the constituents in his or her district with a ‘family ‘bank account that runs into ten figures. Running for political office must be more satisfying, or at least less painful when you lose if it is other peoples’ money that you are campaigning with.

The last point that we researched did not yield any answers. Why would the solicitors try to solicit money for a political candidate from the 8th district of Minnesota from potential donors who do NOT live in that district?

The sad part of this is that this style of solicitation is not just limited to one political party or certain political offices. Thanks to the SCOTUS “Citizens United” decision, the ever increasing amount of money required to keep up with the candidate on the other side of the ballot will cause this type of heavy handed solicitation by paid solicitors to become even more commonplace. Charities are required by law to provide information to donors about how much of their donations ACTUALLY go to said charity after expenses. I wonder what we would find out about political donations if the same standards were applied to politics.

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