We’ve followed the career of the Consumer Financial Protection Bureau since it was established in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
Shortly after the financial crisis, we eagerly anticipated the new agency to help those who were the target of abusive lending and foreclosure practices.
Since its inception, however, it seems as if there have been a number of controversies that have created critics of the CFPB. Some have hailed the CFPB because it was created out of good intention.
There is no question that the CFPB has done a great job in collecting and publicizing consumer complaints.
The announcements of consumer complaints seem to be a public airing of consumer grievances, which sometimes signaled forthcoming action from the agency in a specific financial sector.
However, critics contend that the CFPB rules have made lending more burdensome for both lenders and consumers by increasing bureaucratic red tape.
It has also increased the cost of lending to consumers by adding levels of compliance measures that are now embedded within the lending process.
Critics have also complained that the CFPB’s enforcement is not fair and unequal in focus. Critics are becoming increasingly vocal, not only because of the sometimes invasive rule making, but more recently of how offenders are chosen and penalized. For example, the Wells Fargo fake consumer account scandal, one of the most egregious consumer scandals post financial crises, was not addressed by the CFPB (until it was too late) because Wells Fargo was allegedly “not a target of the agency at that time.”
Referring to the complaint database, Rubin stated: “The CFPB’s complaint database contained grievances against almost every financial business. Enforcement targeted the companies with the most revenue...rather than those with the most complaints.”
He further stated: “Targets (of the CFPB) were almost certain to write a check... Even the size of the checks didn’t depend on actual wrongdoing — during investigations, Enforcement demanded targets’ financial statements to calculate the maximum fines they could afford to pay.” The recent PHH Corp vs Consumer Financial Protection Bureau case highlighted some of the alleged abuse of power by an agency with no oversight.
U S Appellate Judge Kavanaugh wrote in his opinion, “That combination of power that is massive in scope, concentrated in a single person, and unaccountable to the President triggers the important constitutional question at issue in this case.”
In an effort to reform the CFPB to become a better steward of consumer protection, H.R.5983 - Financial CHOICE Act of 2016 was introduced during the last congress.
The effort to compel oversight on the now embattled agency, as well as provide for a panel of decision makers (in lieu of a single chairperson), is unfortunately highly politicized.
As financial consumers, we should demand a better and fair protection agency serving without political motive.
Dan Krell is a Realtor® with RE/MAX All Pro in Rockville, MD. You can access more information at www.DanKrell.com.