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Yesterday, the CFPB filed an important lawsuit accusing ITT, a for-profit school, of a variety of alleged violations, including pressuring students into high-cost predatory loans with little promise of a future job. The CFPB was joined by several leading state attorneys general, including Jack Conway of Kentucky and Lisa Madigan of Illinois, who have also filed similar lawsuits (WSJ story). It's the first CFPB lawsuit against a for-profit student lender, but not in any way its first action to protect consumers.
This morning, I join CFPB leaders, consumer attorney Len Bennett and industry representatives for a panel presentation to its Consumer Advisory Board on how the CFPB can take actions to fix the broken credit reporting system. The panel and related events should begin live on CFPB's livestream (find it on the homepage) at about 10AM Eastern Time. (UPDATE: The event is over. An archived video will be posted in the next few days.)
We discuss needed changes to the credit reporting marketplace in U.S. PIRG Education Fund's November report on the CFPB's Public Consumer Complaint Database: Big Credit Bureaus, Big Mistakes: The CFPB’s Consumer Complaint Database Gets Real Results for Victims of Credit Reporting Errors.
Yet, this afternoon, the U.S. House will probably vote to hobble the CFPB in several ways. Go figure. The CFPB has been making a difference for consumers (check out what they did in December alone!), yet some on Capitol Hill, and some powerful special interests, don't like the idea of an agency with just one job, protecting consumers.
U.S. PIRG and the state PIRGs, as founding and active members of Americans for Financial Reform, joined AFR in a 115-group letter urging the House to reject HR 3193, today's proposal to weaken the CFPB in several ways. The House will likely pass the bill anyway, but I bet the Senate won't even take it up. Even if it were to do so, the President has issued a veto threat.
Nevertheless, it is important to continue to point out that the CFPB is making giant efforts to dig the country out of the mess caused not by too much regulation, as its opponents assert, but by a lack of Wall Street regulation and oversight. Do any House opponents remember 2008?
The CFPB, a centerpiece of the 2010 Wall Street Reform and Consumer Protection Act, is making financial markets work and getting real results for consumers. As we pointed out in our joint letter to House members yesterday:
Since July 2011, the CFPB has been doing its job of protecting consumers and establishing rules and guidelines so that markets will work in an open, transparent and fair way. It is putting money back in the pockets of defrauded consumers, including, for example, refunds of over $700 million to consumers from credit card companies that had treated them unfairly, along with refunds of hundreds of millions more from abusive practices ranging from unfair mortgage servicing to auto loan pricing discrimination to deceptive practices aimed at service members.
The CFPB has been on the job helping service members and veterans, seniors, students and other consumers at high risk of financial fraud. Important new rules it has put in place include new standards so that abusive mortgages like those that helped cause the financial crisis cannot return and new protections to prevent people from being gouged when they send money to family abroad. Further, the CFPB is the only federal financial regulator that has met all of its regulatory deadlines, and it has received praise even from industry leaders for its transparency and openness. [...]
Thank you for your consideration of our views. If accepted, the proposed legislation would weaken the Consumer Bureau, prevent it from doing its job and instead serve the interests of Wall Street. We urge you to oppose this and any similar bills designed to handcuff the CFPB at the expense of consumers. The CFPB is the first federal agency with only one job — protecting consumers in the financial marketplace. The agency is doing that job well, and there is much work that remains to be done. The bills incorporated into HR 3193 would take away the tools it needs to do its job and undermine its mission. Passage of HR 3193 would harm consumers and empower the worst elements of the financial industry.
Read the letter for the full details on why U.S. PIRG and state PIRGs, the AFL-CIO, The Leadership Conference on Civil and Human Rights, Consumers Union and over a hundred other AFR members oppose the package of rollbacks included in HR 3193. They range from taking away the CFPB's independent funding (it would become the only federal financial agency subject to the politically-charged appropriations process) to giving other regulators even more authority than they already have to overturn CFPB decisions, including at the request of a single corporate wrongdoer.
Weakening the CFPB is a path toward more reckless financial practices that would hit Americans in their pocketbooks and throw dirt into the gears of our recovering economy. It's the wrong way to go.
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