“It’s time to unrig our broken political system. Our political leaders have been most responsive to the interests of their wealthy donors for too long while the needs of normal Americans go unaddressed.”
Russia’s Foreign Minister Sergei Lavrov and Donald Trump in the Oval Office the day after James Comey’s firing. Photo: YouTube,
In July of last year, Congress overwhelmingly passed a bill that put new sanctions on Russia. The support was as close to unanimous as you see in Congress these days; only three dissenting votes in the House and two in the Senate.
Today was to be the day that the Treasury Department was to begin imposing economic sanctions against people and businesses doing business with Russia’s intelligence and defense sectors. They were also supposed to provide a list of oligarchs maintaining close ties to Putin.
So what did the administration do? They said that they wouldn’t be imposing sanctions. “Sanctions on specific entities or individuals will not need to be imposed because the legislation is, in fact, serving as a deterrent,” said a State Department official.
When Donald Trump became President, he took the oath of office:
“I do solemnly swear (or affirm) that I will faithfully execute the Office of President of the United States, and will to the best of my Ability, preserve, protect and defend the Constitution of the United States.”
Overriding Congress and unilaterally deciding not to enforce a sanctions bill that you yourself signed is not faithfully executing the office. It is not preserving, protecting or defending the Constitution. It’s the type of stunt you see in a third rate banana republic, and not in the United States – until now.
So, what happens next? Will Congress grow a spine and demand that he put sanctions in place? Will they finally admit to themselves that this overgrown toddler has no business being where he is? That every day he stays in office means further degradation of us as a nation? Will they finally figure that their Faustian compact isn’t worth the damage it does to the country? Or will they keep on making excuses for this wretched imitation of a human being?
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).
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 →
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 →
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 →
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 →
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.
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 →
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], 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.