By Charlene Crowell
In everyday life, birthdays and anniversaries of many sorts are observed and celebrated. When it comes to consumer finance, there are two more anniversaries worth celebrating.
Congress enacted the Dodd-Frank Wall Street Reform Act on July 21, 2010 in response to the largest national economic challenge since the Great Depression. A key goal was and remains to protect the nation and its taxpayers from ever again bearing the financial burdens of risky deals by Wall Street and other private financial players. The following year, the Consumer Financial Protection Bureau (CFPB) opened its doors to serve the needs of America’s consumers.
Before the CFPB, no single federal agency had consumers as its sole priority and focus. To date, the Bureau has benefited 17 million consumers through a total of $10.1 billion in financial relief. More than 650,000 consumers have chosen to use its flexible complaint system that includes the options of online, written and telephone complaints in multiple languages.
On the enforcement side, CFPB’s actions have addressed multiple violations in different lending areas:
• In 2013 Chase Bank USA, N.A. and JPMorgan Chase Bank, N.A. was ordered to refund an estimated $309 million to more than 2.1 million customers for illegal credit card practices.
• The following year, Flagstar Bank was fined $37.5 million for violating the CFPB’s mortgage servicing rules by illegally blocking 6,500 borrowers’ attempts to save their homes.
• That same year, Colfax Capital Corporation and Culver Capital, LLC, also collectively known as “Rome Finance,” was ordered to pay $92 million in debt relief to 17,000 service members and other consumers for masking high-cost financing charges on artificially-inflated costs for goods and services.
• ACE Cash Express, operating over 1,500 storefront payday locations in 36 states, was ordered in 2014 to pay $10 million in restitution and penalties for its threats of criminal prosecution and intimidating phone calls that “create a sense of urgency” when contacting delinquent borrowers.
• Earlier this year, $480 million in debt relief to student loan borrowers who were wronged by the now-defunct Corinthian Colleges.
In recent days, the CFPB announced two additional enforcement actions involving illegal and deceptive credit card violations, and another for illegal private student loan servicing practices. As a result, Citigroup was ordered to refund $700 million to 8.8 million consumers and pay separate fines totaling $35 million. Discover Bank and its affiliates will refund $16 million to consumers, pay a $2.5 million penalty and improve its billing, student loan interest reporting and collection practices.
Additionally, 30 million consumers plagued by debt collectors now have the chance to be treated fairly because of CFPB’s first-time ever supervision of debt collection companies. The 12 million consumers who borrow payday loans will soon have more protection by a CFPB rule that addresses the myriad abuses wrought by triple-digit interest rates.
This and other abundant data suggest that America’s consumers are well-served by its four-year old consumer cop-on-the-beat.
Despite CFPB’s productivity, its critics have remained steadfastly opposed. Dozens of bills have been introduced to undermine its independence, its rules to protect against unfair deceptive and discriminatory practices, and its authority to oversee financial services such as payday lenders and auto finance companies.
When the Bureau took action against auto lenders who participated in pricing schemes that charged Black and Latino borrowers more for their loans, congressional critics organized threatening letters questioning their rationale and motives. And when the Bureau adopted new rules to rein in abuses in mortgage lending, those same critics rushed to file bills to weaken the rules and return to the very practices that lead up to the foreclosure crisis.
Fortunately, none of the attacks have made it into law.
At a July 8 Brookings forum that focused on the Wall Street reform law, Treasury Secretary Jack Lew was asked by a reporter about the effort to abolish CFPB.
“I will say, for all of the concerns that a lot of people had early in its history, as they’ve taken action there’s been broad, overwhelming support for the fact that they’ve done things in a careful and sensible way, listening to all sides,” said Secretary Lew. “So I think if you kind of step away from the debate that took place before the CFPB was created and look at the track record, it should put to rest a lot of that controversy.”
Others who agree with Treasury Secretary have also spoken up in its defense.
“The Consumer Financial Protection Bureau has built an unprecedented record of success protecting our nation’s consumers and service members who have been victimized by unscrupulous corporations and financial institutions, noted Congresswoman Maxine Waters, the Ranking Member on the House Financial Services Committee and a member of the Congressional Black Caucus.
“The CFPB has been, and continues to be, party to a wide array of enforcement actions related to practices that disproportionately affect communities of color, including deceptive marketing, unlawful debt collection, discrimination, unlawful fees and fraudulent mortgage relief schemes,” continued Waters.
A recent consumer survey by the Center for Responsible Lending and Americans for Financial Reform found that although anger at banks and other financial services companies has moderated over their role in the housing crisis, broad and bipartisan support for CFPB remains. When consumers self-identified as likely 2016 voters were asked to choose between more and less regulation of financial companies 71 percent side with more, and 20 percent with less. Additionally, 64 percent of these voters saw a need for an agency charged with protecting consumers against dangerous financial products.
So it seems that public sentiment sides with CFPB continuing its important work to protect consumer credit and finances.
“I’m truly proud of the CFPB’s outstanding success on behalf of our nation’s active-duty military, restoring tens of millions to service members. And I applaud the Bureau for the work it’s doing to rein in payday lenders that have turned a business intended to help hard working consumers stay out of financial trouble into one that often creates trouble instead,” added Congresswoman Waters.
“I am hopeful that soon, the CFPB will eventually yield a strong and simple rule that protects our low-income and minority communities from unaffordable rates and unfair terms,” she concluded.
Charlene Crowell is a communications manager with the Center for Responsible Lending. She can be reached at 919-313-8523.