Scarcely six years after its creation, the Consumer Financial Protection Bureau is being walked to the gallows.
A half-dozen bills have been presented to dismantle the Dodd-Frank Wall Street and Consumer Protection Act, which laid the foundations for the creation of the CFPB. Republican lawmakers seem poised to the slash the agency’s budget by handing control over its funding to Congress.
Other efforts to neuter the bureau include the elimination of its ability to build cases against bad banks. If it were passed, databases full of customer complaints of abusive of unethical practices on the part of financial institutions could be completely erased.
An informative and sarcasm-filled business piece by David Lazarus of The LA Times fingered the author’s favorite proposed legislation, which would eliminate the consumer Financial Protection Bureau in its entirety. Introduced jointly by Texas Senators Ted Cruz and John Ratcliffe, the aim is ostensibly to free the working American and little-man entrepreneur from the overbearing regulations of big government.
Cruz’s office wouldn’t respond to Lazarus’s request for an interview, but Ratcliffe’s staff did send an e-mail which was apparently full of holes and bizarre claims about a weakening housing market.
Republicans like Cruz and Ratcliffe have good reason to start writing bills, even if they’re reluctant to correspond with reporters.
“We’re going to be doing a big number on Dodd-Frank,” Donald Trump said at the end of January, before proclaiming that “the American Dream is back.”
Gutting Dodd-Frank is a task made easier by a new executive order that requires every new regulation to accompany the slashing of two old rules. Attempts by conservatives in Congress to fine-tune banking and finance could easily take advantage of the requirement to do away with prohibitions they view as being too strict and anti-business.
Steve Mnuchin, Secretary of the Treasury and former Goldman Sachs Chief Information Officer, decried how Dodd-Frank limits the sorts of lending practices which led to the collapse of the housing market and economy in 2008. A combined effort by Republicans would see the partial or full repeal of the act as well as the charge to end the autonomy of the Consumer Financial Protection Bureau.
Democrats might not be able to do much to resist aside from pointing at facts and figures. Since the agency’s creation in 2011, it has fought for and won over $11 billion in restitution for Americans who were defrauded by banks and other financial institutions. Several of its successes include increasing the oversight of exploitative and mandatory HigherOne college debit cards and damages awarded to UniRush clients who had their funds rendered inaccessible after a system error.
Students currently enrolled in university and community college – as well any parents who may have signed Plus+ loans – should be paying close attention to what happens next. The Consumer Financial Protection Bureau has been pivotal in punishing federal loan servicers conning borrowers into paying more per month than they could reasonably afford. With student debt burgeoning and having eclipsed credit card debt years ago, the ramifications of the Republican push to skewer consumer protections could be enormous.
But really, is anyone surprised? A billionaire with a cabinet full of billionaires enabling millionaires to make laws to save other billion- and millionaires money shouldn’t come as a shock to anyone.