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Working People Need a Strong CFPB with a Leader Who Supports Its Existence

Wednesday, November 29th, 2017

The Consumer Financial Protection Bureau was created after the Great Recession of 2008 wreaked havoc on the U.S. economy, causing millions of families to lose their homes to foreclosure and forcing millions of working people onto the unemployment rolls. Its mission is to protect working people from tricks and traps in consumer financial products like home mortgages and credit cards.

The CFPB has proven extremely effective. Since its creation in 2010, the bureau has returned $12 billion to consumers wronged by lenders. Twenty-nine million consumers have received relief.

The bureau owes much of its success to strong leadership. Sen. Elizabeth Warren (D-Mass.) originally had the idea to create the CFPB when she was a law professor at Harvard and led the bureau in its infancy. In 2012, she was succeeded by Richard Cordray, who had a strong record of pursuing wrongdoing against consumers as Ohio attorney general before his time at the CFPB.

Cordray, however, resigned last week, and President Donald Trump named Office of Management and Budget Director Mick Mulvaney to replace him.

There are a few problems with this. First, Mulvaney already has a job leading the Office of Management and Budget and has shown no intention of stepping down from the post. Mulvaney also has been highly critical of the CFPB, calling it a “joke…in a sick, sad way.” Finally, there are legal questions about who gets to lead the bureau when the director steps down—the deputy director or someone appointed by the president.

In addition, Mulvaney’s former chief of staff, Natalee Binkholder, left Mulvaney’s congressional staff to go to work as a lobbyist for Santander, a bank that has faced sanctions from the bureau and is reportedly facing a CFPB lawsuit alleging that it overcharged consumers for car loans.

We learned the hard way from the financial crisis in 2008 that working people need the CFPB. We need the bureau to fight to protect us from predatory lenders and, in order to be effective in doing that, it needs to be led by a strong, full-time director who believes in its mission. Consumer financial protection is a full-time job, not a side gig for someone who things it’s a “joke.”

This blog was originally published at AFL-CIO on November 28, 2017. Reprinted with permission. 

About the Author: Heather Slavkin Corzo is the director of the AFL-CIO Office of Investment. She joined the AFL-CIO in 2007 as a research analyst and was the senior legal and policy adviser from 2007 through 2014.

On the CFPB’s Birthday, Stand Against Sharks

Friday, July 21st, 2017

July 21 marks the six-year anniversary of the Consumer Financial Protection Bureau, which was created in the wake of the Wall Street crime wave that led to the financial crisis of 2008.

The CFPB was first conceived by law professor Elizabeth Warren, now Senator Warren from Massachusetts, as an agency that could protect the American people from being mistreated, defrauded, and otherwise ripped off by powerful bankers who ran institutions that engaged in massive criminal behavior and yet never spent a day in jail.

It is a day to celebrate, and a day to fight.

Why Celebrate?

Why celebrate? Because, despite a number of attempts to tie its hands, the CFPB has been enormously successful. It has provided almost $12 billion in relief to 29 million victims of bank malfeasance.

It has provided nearly 50 million borrowers with new protections from dirty mortgage tricks – including surprise fees and mistreatment for those who fall behind in their payments.

The CFPB has rewritten credit card rules, saving customers more than $16 billion in hidden fees. It has helped stay-at-home spouses and Americans serving in the armed forces.

Why fight? Because Republicans – helped at times by some venal Democrats – are doing their best to gut the CFPB and leave consumers defenseless against the predators on Wall Street.

Inside the Shark Tank

Does the word “predator” seem too harsh a word for bankers? William Dudley, then President of the Federal Reserve Bank of New York, said in 2013 that Wall Street’s big banks suffered from “deep-seated cultural and ethical failures” and “the apparent lack of respect for law, regulation and the public trust.”

2015 survey of banker ethics found an extraordinary tolerance for corrupt behavior and “a marked decline in ethics” since the study was first conducted in 2012. More than one-third of bankers earning $500,000 or more per year said they “have witnessed or have first hand knowledge of wrongdoing in the workplace.”

One in four said they would break the law themselves if they could make $10 million or more by doing it.

Wall Street’s offenses include “price fixing, bid rigging, market manipulation, money laundering, document forgery, lying to investors, sanctions-evading, and tax dodging.”

At last count, banks had paid more than $200 billion in fines and settlements to settle fraud charges. Bank of America had paid more than $77 billion.

Checkered Citi and Chase

Citigroup, the megabank created with bipartisan cooperation from Republican Senator Phil Gramm and Clinton Treasury Secretary Robert Rubin (who later became the bank’s chief executive), had paid nearly $20 billion.

JPMorgan Chase CEO Jamie Dimon considers himself a worthy commentator on economic issues. But, under his leadership, his bank paid nearly $30 billion for crimes over a four-year period.

These include, according to an investors report, violations of the Bank Secrecy Act; money laundering for drug cartels; violations of sanction orders against Cuba, Iran, Sudan, and Liberia; violations of the Servicemembers Civil Relief Act; the fraudulent sale of unregistered securities and derivatives; bribery of state officials; and, obstruction of justice, including refusal to release documents in the Bernie Madoff case.

Voters Aren’t Fooled

new poll finds that “More than nine in ten Americans (91%) believe it is important to regulate financial services, including 71% who believe it is very important. Strong bipartisan majorities say financial regulation is very important.” That includes Democrats (81%), independent voters (75%), and Republicans (58%).

They’re right. When Trump budget director Mick Mulvaney boasts that the fiction he calls “MAGAnomics” will lead to economic growth of more than 3 percent per year, he doesn’t explain that we routinely had that level of growth until unregulated bank fraud led to the financial crisis of 2008.

If we let the Republicans deregulate Wall Street again, it will set the stage for another crisis.

Republicans Are a Shark’s Best Friend

These bankers may break the law – and be unpopular with voters – but they’ve still got friends on Capitol Hill. Right now Republicans like Sen. Tom Cotten are working to undermine the CFPB’s new arbitration rule, which is set to take effect in September.

This rule ends banks’ ability to force customers into arbitration, a process that’s skewed in Wall Street’s favor. The CFPB rule would make it possible for customers to once again file class-action suits. Given Wall Street’s deep pockets for attorney’s fees, class-action suits are one of the few tools customers have for defending themselves in court.

House Republicans also passed the so-called “Financial Choice Act” – “Financial Carnage Act” might be a better name – a bill that would gut the CFPB and strip away other consumer protections.

When the Republicans fight the CFPB, they’re standing with the student loan predators at Navient. That’s the loan servicing company the CFPB sued earlier this year for cheating borrowers of their rights. That means they’re standing against the 44 million Americans who owe more than $1.4 trillion in student debt.

When the Republicans fight the CFPB, they’re standing with the bankers who defrauded mortgage holders and fraudulently foreclosed on American families. That means they’re standing against the millions of Americans who currently hold more than $14 trillion in mortgage debt.

When the Republicans fight the CFPB, they’re standing with the payday lenders who have trapped hundreds of thousands of lower-income Americans into a debt trap that can lead to annualized interest rates of 300 percent. That means they’re standing against the estimated 12 million Americans who pay an average of $520 per year in interest on eight $375 loans. These borrowers would be protected by the CFPB’s proposed payday lending rules.

People’s Action is repeating its annual “shark week” tradition, which draws attention to  this year, with anti-payday lender actions timed to coincide with the Discovery Channel’s “shark week” programming.

The CFPB has provided an extraordinary amount of help to millions of Americans in just six years. Now it needs our help.

This blog was originally published at OurFuture.org on July 21, 2017. Reprinted with permission.

About the Author: Richard (RJ) Eskow is a writer and radio journalist who has worked in health insurance and economics, occupational health, risk management, finance, and IT. He is also a former musician.

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