Protect Consumer Protection Agency Against Assaults

The Consumer Financial Protection Bureau, or CFPB, is the most important federal agency you have probably never heard of. Since 2011, the CFPB has served as a wildly successful and accountable watchdog over unfair and greedy practices by companies offering financial products like mortgages, student loans, and credit cards.

Now we are seeing renewed attacks against the Consumer Financial Protection Bureau because Wall Street lobbyists and their allies think they have an opening to weaken it with a new Congress and administration — even after an election largely about a system rigged against the average American. The West Virginia delegation in Congress should stand up to these attacks and side with consumers.

The attacks we are hearing against the CFPB only serve the big Wall Street banks and other financial companies like payday lenders. In fact, the financial industry just spent $2.3 million a day, totaling over $1.4 billion during the recent election cycle, to buy influence in Washington and re-rig the rules in their favor.

That’s why a few weeks ago we launched the “West Virginia Campaign to protect the CFPB,” to make the CFPB’s record of success known and fight back against Wall Street attacks.

Some background: The CFPB was created by Congress after the economic collapse in 2008 to protect consumers and reduce the risk of another collapse.

It has implemented fair rules of the road that have evened the playing field for responsible consumers and businesses alike. The CFPB is protecting students, seniors, service members and the rest of us too.

The CFPB was in the news a couple months ago for its record $100 million penalty and consumer restitution against Wells Fargo for millions of fraudulent consumer accounts. But this was just the tip of the iceberg — the agency has also returned nearly $12 billion to over 27 million consumers from many other companies that have broken the law. Additionally, the CFPB’s website hosts a complaint database that has processed over 1 million complaints — including 1,735 from West Virginians — and it provides educational resources to make important financial decisions.

The CFPB has also been accountable to the public, including a small business review panel and four advisory boards, 36 public town halls and field hearings, and 61 visits by senior officials to testify before Congress.

Nevertheless, the financial industry has attacked the agency since before it was even created. But the attacks have intensified as the CFPB continues to be the poster child of a government agency that is actually working and not corrupted by the industry it is tasked with regulating.

These attacks, though sometimes presented as “reforms,” would only open the CFPB up to gridlock or corruption by changing the agency’s leadership structure, starving the agency by changing its funding source, or keeping the rules rigged against consumers.

First, the agency is currently headed by a single director, Richard Cordray. There are efforts to change the structure to a commission of five people. Getting Richard Cordray confirmed was a two-year long uphill battle. Getting five people confirmed would be even more difficult, possibly leaving the agency unable to fully function. Or the five seats could be stacked in favor of the industry it is meant to rein in. We have seen both scenarios at other agencies.

Second, the CFPB is currently funded independently through the Federal Reserve like every banking regulator has been since the 1800s. This funding structure exists to protect the economy from the politicization of banking policies as much as possible. There is an effort to bring the CFPB’s funding under Congressional approval — this means Congress and lobbyists could starve it death so it wouldn’t be able to do its job.

Third, the CFPB is currently working on rules that would protect consumers from payday debt traps and forced arbitration. The agency has proposed protections that would require payday lenders to determine that borrowers can afford to pay back their loans –something that other financial lenders already do. Forced arbitration is used to prevent consumers from banding together and joining class action lawsuits to seek justice when they are wronged by financial companies. There are efforts to hamstring the CFPB’s work on both these rules.

We need to stand up against these attacks. If enough West Virginians contact our members of Congress, we can make sure our voices don’t get drowned out by the big Wall Street banks and other financial companies.

Little is with the U.S. Public Interest Research Group, with offices in Washington, D.C., and Boston.