tag:theconversation.com,2011:/fr/topics/cfpb-40612/articlesCFPB – The Conversation2019-03-15T10:42:55Ztag:theconversation.com,2011:article/1132442019-03-15T10:42:55Z2019-03-15T10:42:55ZConsumer rights are worthless without enforcement<figure><img src="https://images.theconversation.com/files/264015/original/file-20190314-28471-1kb98g4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">John F. Kennedy's 1962 speech inspired the modern consumer rights movement.</span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Watchf-AP-A-DC-USA-APHS418417-President-John-F-/bebb52dd0ea04966a5d03f275b49daeb/5/0">AP Photo/Bill Allen</a></span></figcaption></figure><p>57 years ago, President John F. Kennedy made an impassioned pitch for stronger consumer rights. </p>
<blockquote>
<p>“If consumers are offered inferior products, if prices are exorbitant, if drugs are unsafe or worthless, if the consumer is unable to choose on an informed basis, then his dollar is wasted, his health and safety may be threatened, and the national interest suffers.” </p>
</blockquote>
<p>Kennedy <a href="https://www.presidency.ucsb.edu/documents/special-message-the-congress-protecting-the-consumer-interest">offered these words of warning on March 15, 1962</a>, a date now celebrated as <a href="https://www.consumersinternational.org/what-we-do/world-consumer-rights-day/">World Consumer Rights Day</a>. He then called on Congress to enact legislation to protect four fundamental consumer rights: the right to safety, the right to be informed, the right to choose and the right to be heard. </p>
<p>The address has become known as the “consumer bill of rights.” But Kennedy also discussed an equally important issue: how such rights would be enforced. After all, without enforcement, consumer rights are just empty promises.</p>
<h2>Consumer rights flourish</h2>
<p>The idea of consumer rights was nothing new in 1962.</p>
<p>As I describe in <a href="http://www.hup.harvard.edu/catalog.php?isbn=9780674976238">my research on the history of consumer credit regulation</a>, the states took an early interest in protecting ordinary Americans against abuse by lenders and debt collectors, beginning in the earliest days of the republic. Most adopted usury laws limiting the price of credit in the colonial period, exemption laws shielding property from seizure by creditors in the 19th century and more tailored consumer credit regulations in the early and middle 20th century. </p>
<p>What was noteworthy about Kennedy’s address was not his push for more consumer rights, but rather his call for the federal government – “the highest spokesman for all the people” – to act on behalf of consumers instead of ceding the role of consumer protector to the states. </p>
<p>Congress heeded Kennedy’s call and passed a flurry of consumer legislation. </p>
<p>In the 1960s and ‘70s, it required lenders to clearly disclose loan terms through the <a href="http://uscode.house.gov/statviewer.htm?volume=82&page=146">Truth in Lending Act</a>, mandated <a href="http://uscode.house.gov/statutes/pl/91/508.pdf">fair credit reporting</a> and <a href="http://uscode.house.gov/statviewer.htm?volume=91&page=874">debt collection practices</a>, created <a href="http://uscode.house.gov/statviewer.htm?volume=80&page=718">safety standards for cars</a> and <a href="http://uscode.house.gov/statviewer.htm?volume=86&page=1207">other consumer products</a>, and banned <a href="http://uscode.house.gov/statviewer.htm?volume=82&page=81">discrimination in housing</a> and <a href="http://uscode.house.gov/statviewer.htm?volume=88&page=1521">consumer lending</a>. More recently, in 2010, <a href="http://uscode.house.gov/statviewer.htm?volume=124&page=1376">Congress created</a> the <a href="https://www.consumerfinance.gov/">Consumer Financial Protection Bureau</a> and tasked the agency with guarding consumers against unfair, deceptive or abusive acts and practices in financial services. </p>
<p>The states also reinforced their decades-old consumer laws in the 1960s and '70s <a href="https://www.repository.law.indiana.edu/cgi/viewcontent.cgi?referer=https://www.google.com/&httpsredir=1&article=1946&context=facpub">by banning unfair and deceptive acts and practices</a> under state “UDAP” laws.</p>
<p>Accordingly, consumer rights today are far more robust than they were when JFK gave his speech. To be sure, new business practices regularly require that <a href="https://www.congress.gov/bill/116th-congress/senate-bill/151/text">existing laws be updated</a> to address unanticipated threats. </p>
<p>But the biggest challenge today is not the need for new consumer rights. Rather, it is ensuring that existing rights are enforced. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/264016/original/file-20190314-28502-1hmef8i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/264016/original/file-20190314-28502-1hmef8i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=391&fit=crop&dpr=1 600w, https://images.theconversation.com/files/264016/original/file-20190314-28502-1hmef8i.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=391&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/264016/original/file-20190314-28502-1hmef8i.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=391&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/264016/original/file-20190314-28502-1hmef8i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=491&fit=crop&dpr=1 754w, https://images.theconversation.com/files/264016/original/file-20190314-28502-1hmef8i.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=491&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/264016/original/file-20190314-28502-1hmef8i.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=491&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Sen. Elizabeth Warren has been a strong advocate for consumer protection and helped establish the Consumer Financial Protection Bureau.</span>
<span class="attribution"><a class="source" href="https://pictures.reuters.com/CS.aspx?VP3=SearchResult&VBID=2C0BXZSHDNUKTG&SMLS=1&RW=1440&RH=789&PN=3&POPUPPN=147&POPUPIID=2C0408WAOD1KD">Reuters/Joshua Roberts</a></span>
</figcaption>
</figure>
<h2>Legal fee recovery and class actions</h2>
<p>There are basically two ways to enforce a consumer right: privately with a lawsuit or publicly via regulators. </p>
<p>The biggest barrier to effective private enforcement is financial. First of all, the harm to an individual consumer from a rights violation is often small, reducing the economic incentive to sue. Secondly, to sue in court, <a href="https://doi.org/10.1111/j.1467-9930.1984.tb00321.x">a consumer generally requires the assistance</a> of an attorney, who must be paid. Finally, even if the individual goes to court and wins, the damage award is frequently too insignificant to deter the violator from engaging in profitable but illegal practices in the future. </p>
<p>Fortunately, two legal innovations have helped consumers overcome some of these hurdles.</p>
<p>One, rules allowing prevailing plaintiffs to recover attorneys’ fees, expanded with the raft of consumer rights legislation of the late 1960s. These provisions gave consumers the right to recover the costs of their legal representation along with any actual damages for some rights violations. </p>
<p>The other was the <a href="https://openscholarship.wustl.edu/cgi/viewcontent.cgi?article=6000&context=law_lawreview">birth of the modern class action lawsuit</a> in 1966, which allowed consumers who suffer similar monetary harms to aggregate their claims into a single large lawsuit, leading to <a href="https://www.reuters.com/article/us-bank-of-america-overdrafts/bank-of-america-settles-overdraft-lawsuit-for-66-6-million-idUSKBN1D22ER">multimillion dollar settlements</a>.</p>
<h2>Public enforcement</h2>
<p>The other way to give consumer rights teeth is through public enforcement. And besides the potential for monetary awards, this method opens the door to other types of remedies for consumers. </p>
<p>For example, <a href="https://www.courierpostonline.com/story/news/local/south-jersey/2019/03/07/nj-sues-kenneth-r-cohen-nu-2-u-auto-world-pine-valley-motors-predatory-loans-repossession-scam/3094508002/">the New Jersey attorney general recently sued two auto dealerships</a>, alleging that they sold damaged vehicles at unaffordable prices to “financially vulnerable” customers who were then left stranded when the dealers repossessed the cars without advance warning. The complaint seeks to ban the violators from selling car in the future, in addition to monetary relief. </p>
<p>Similarly, in 2018, the <a href="https://www.justice.gov/opa/pr/five-charged-elder-fraud-schemes">U.S. Department of Justice brought criminal charges</a> against the perpetrators of a multimillion dollar scheme to defraud elderly and vulnerable consumers with the false promise of cash prizes. The violators could be subject to both fines and imprisonment.</p>
<p><a href="https://www.ftc.gov/reports/annual-highlights-2017/enforcement#money">In 2017 alone</a>, the Federal Trade Commission directly returned almost $320 million to consumers through enforcement actions, not to mention its work overseeing the return by FTC defendants of over $6 billion to consumers. </p>
<h2>Enforcement shortfalls</h2>
<p>Recent developments, however, raise concerns about the future of consumer rights enforcement through both public and private channels.</p>
<p>The strength of public enforcement is subject to the whims of state and federal officials, who may reduce enforcement resources or refuse to bring enforcement actions. </p>
<p>A prime example is the weakening of the <a href="https://www.consumerfinance.gov/">Consumer Financial Protection Bureau</a>, which from 2011 through 2017 helped millions of consumers <a href="https://theconversation.com/why-we-need-to-save-the-consumer-financial-protection-bureau-87573">receive nearly $12 billion</a> back from misbehaving financial institutions. A <a href="https://consumerfed.org/reports/dormant-the-consumer-financial-protection-bureaus-law-enforcement-program-in-decline/">recent study found</a> that CFPB enforcement activity has declined significantly since the end of 2017, when Richard Cordray, its first director, stepped down.</p>
<p>His temporary replacement, Mick Mulvaney, <a href="https://www.nytimes.com/2018/04/02/us/politics/cfpb-mick-mulvaney.html">froze all new enforcement actions</a>. He subsequently <a href="https://www.americanbanker.com/news/cfpb-drops-probe-into-lender-that-gave-to-mulvaneys-campaigns">dropped one ongoing lawsuit</a> against a group of payday lenders and declined to file charges against another lender that had previously donated to Mulvaney’s political campaign. The head of its student loan office resigned last August, <a href="https://www.npr.org/2018/08/27/642199524/student-loan-watchdog-quits-blames-trump-administration">alleging that the current CFPB leadership</a> had “abandoned its duty to fairly and robustly enforce the law.” </p>
<p>In a similar vein, Kathy Kraninger, recently appointed as CFPB director, <a href="https://www.americanbanker.com/list/takeaways-from-trump-budget-cfpb-reform-fha-fees-and-student-loans">has proposed reducing her own agency’s budget</a> by about 4 percent in 2019 and 9 percent in 2020. </p>
<p>As for private enforcement, the ability of consumers to aggregate their claims has been endangered by the spread of mandatory pre-dispute arbitration agreements. These contract terms, found in a variety of consumer agreements, <a href="https://chicagounbound.uchicago.edu/uclrev/vol79/iss2/3/">prevent consumers from pursuing class relief in court</a>. </p>
<p>Each injured party must either bring an individual action, which may be economically unfeasible, or be left without a remedy. The U.S. Supreme Court’s <a href="https://www.law.cornell.edu/supct/pdf/09-893P.ZS">recent arbitration decisions</a> offer little hope that judges alone will keep the courthouse door open to consumer class actions. </p>
<p>Furthermore, <a href="https://www.americanbanker.com/news/senate-repeals-cfpb-arbitration-rule-in-win-for-financial-institutions">Congress narrowly voted in 2017 to repeal</a> a CFPB rule that would have prevented financial service providers from requiring consumers to waive their class action rights. </p>
<h2>Paper tigers</h2>
<p>Compared with 1962, when President Kennedy put consumer concerns on the national agenda, ordinary Americans now have far more robust rights to safety, to information, to choice and to a fair hearing. </p>
<p>But consumer rights do not enforce themselves. Public enforcement requires funding and willing leaders. Private enforcement requires legal devices that allow consumers to pay attorneys for their work. </p>
<p>Without an ongoing commitment to enforcement, consumer rights may become paper tigers, offering the appearance of protection without any teeth.</p><img src="https://counter.theconversation.com/content/113244/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Anne Fleming does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>JFK pushed consumer rights to the top of the national agenda in 1962, leading to a raft of new laws offering new protections. But without enforcement, such rights are meaningless.Anne Fleming, Associate Professor of Law, Georgetown UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/988422018-06-29T10:35:48Z2018-06-29T10:35:48ZMick Mulvaney turned the CFPB from a forceful consumer watchdog into a do-nothing government cog<p>Until last Thanksgiving, the <a href="https://www.consumerfinance.gov/">Consumer Financial Protection Bureau</a> was known for forcefully pursuing its core mission, returning nearly US$12 billion to about 30 million consumers who had been taken advantage of by financial institutions. </p>
<p>But since then, the bureau has been <a href="https://theconversation.com/consumers-are-biggest-losers-of-trumps-ongoing-war-on-regulations-91301">known</a> for … well, not much. After Obama-appointee Richard Cordray stepped down in November, President Donald Trump named as interim director, his budget chief Mick Mulvaney, <a href="https://www.vox.com/policy-and-politics/2017/11/16/16667266/mick-mulvaney-cfpb-cordray-omb-joke">who has long been a foe</a> of the CFPB. </p>
<p>The president <a href="https://www.msn.com/en-us/news/politics/trump-nominates-budget-official-kraninger-to-lead-consumer-bureau/ar-AAyPeeU">recently nominated</a> a new permanent director – who has no consumer finance experience but is one of Mulvaney’s own deputies at the Office of Budget and Management – for a five-year term, with hearings likely to take place later this year. </p>
<p>So what does this mean for the only government agency focused on protecting consumers from financial shenanigans? I’ve been writing about consumer law for more than 30 years and follow the work of the CFPB closely. Let me explain what it used to do, what it’s doing now and what the change means for consumers. </p>
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<img alt="" src="https://images.theconversation.com/files/225403/original/file-20180628-117440-1chske8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/225403/original/file-20180628-117440-1chske8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/225403/original/file-20180628-117440-1chske8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/225403/original/file-20180628-117440-1chske8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/225403/original/file-20180628-117440-1chske8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/225403/original/file-20180628-117440-1chske8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/225403/original/file-20180628-117440-1chske8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Richard Cordray left the CFPB last year to run for governor Ohio.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Ohio-Governors-Race-Democrats/111b04b4845540898f57e1daf66f6f06/14/0">AP Photo/John Minchillo</a></span>
</figcaption>
</figure>
<h2>The CFPB under Cordray</h2>
<p>The CFPB <a href="https://www.sec.gov/about/laws/wallstreetreform-cpa.pdf">was launched in 2011</a> in the aftermath of the 2008 financial crisis as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The goal was to protect consumers from deceptive or misleading practices in the financial industry.</p>
<p>So what has the agency accomplished in its short life span? A lot. Here are a few highlights. </p>
<ul>
<li><p>It <a href="https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-fines-wells-fargo-100-million-widespread-illegal-practice-secretly-opening-unauthorized-accounts/">fined Wells Fargo</a> $100 million and forced it to refund fees it had <a href="https://theconversation.com/how-wells-fargo-encouraged-employees-to-commit-fraud-66615">fraudulently charged customers</a> by <a href="https://dx.doi.org/10.2139/ssrn.2516432">opening millions of fake accounts</a> without their permission. The bank was also required to hire an independent consultant to review its procedures. This probably wouldn’t have happened nationwide without the CFPB.</p></li>
<li><p>It blocked debt collector attorneys from <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-takes-action-halt-illegal-debt-collection-practices-lawsuit-mill-and-debt-buyer/">suing consumers based on false information</a>. </p></li>
<li><p>It discovered systemic problems with consumer credit reports and forced companies to <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-oversight-uncovers-and-corrects-credit-reporting-problems/">correct errors</a>.</p></li>
<li><p>It compelled credit card companies to <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-subprime-credit-card-company-to-refund-2-7-million-for-charging-illegal-credit-card-fees/">refund illegal fees</a>. </p></li>
</ul>
<p>And the list goes on and on. In addition, after the bureau began publishing <a href="https://www.consumerfinance.gov/data-research/consumer-complaints/">consumer complaints on its website</a>, financial institutions have responded <a href="https://www.consumerfinance.gov/data-research/consumer-complaints">more than 700,000 times</a>, often by providing remedies.</p>
<h2>What the CFPB’s been up to lately</h2>
<p>All that action came to a very sudden stop the day Mulvaney entered the building on Nov. 27. Although there was a <a href="https://www.nytimes.com/2017/11/28/us/politics/mick-mulvaney-leandra-english-consumer-bureau.html">brief tussle</a> over who had the right to run the bureau, Mulvaney quickly took charge and installed his own people. </p>
<p>Since then, Mulvaney has brought only <a href="https://www.consumerfinance.gov/about-us/newsroom/bureau-consumer-financial-protection-settles-security-group-inc/">two cases</a>, one of which was against <a href="https://www.consumerfinance.gov/policy-compliance/enforcement/actions/wells-fargo-bank-na-2018/">Wells Fargo</a> – the <a href="http://money.cnn.com/2017/12/08/investing/trump-twitter-wells-fargo/index.html">target of a Trump tweet</a> – over the bank forcing consumers to pay for car insurance they didn’t need. That contrasts sharply with the work of Cordray, who, for example, <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3072545">filed</a> nearly one case a week in 2015 and 2016. </p>
<p>Mulvaney has also sought to protect banks in other ways. After <a href="https://www.documentcloud.org/documents/4357880-Mulvaney-Memo.html">saying</a> the bureau should be guided by the number of complaints it receives, Mulvaney <a href="https://www.americanbanker.com/news/mulvaney-to-drop-public-complaints-against-firms-change-cfpb-name">raised</a> the possibility of concealing those complaints from the public, which would lower the complaint database’s profile, and probably reduce the number of complaints it receives. The proposal, which is still under discussion, would also <a href="http://www.nydailynews.com/opinion/cfpb-leaving-consumers-high-dry-article-1.4006220">make it harder</a> for consumers to obtain redress from misbehaving companies. </p>
<p>In June, Mulvaney fired the unpaid members of the bureau’s advisory committees, a move criticized by <a href="https://www.cnn.com/2018/06/08/opinions/mick-mulvaney-doing-the-financial-sectors-dirty-work-by-abolishing-cab/index.html">consumer advocates</a> and <a href="http://pubcit.typepad.com/clpblog/2018/06/where-are-the-defenders-of-mulvaneys-decision-to-fire-the-cab-members-anyone-bueller.html">financial industry figures</a> alike. The advisory committees gave the bureau an opportunity to talk to consumer, financial and scholarly experts about how it should act.</p>
<p><a href="https://www.nytimes.com/2018/06/07/opinion/cfpb-mick-mulvaney-consumer-advisory-board-fired.html">Shifting justifications</a> were offered for the firings in the subsequent days, from <a href="https://www.cnn.com/2018/06/08/opinions/mick-mulvaney-doing-the-financial-sectors-dirty-work-by-abolishing-cab/index.html">citing criticism</a> of the committees to <a href="https://www.americanbanker.com/news/mulvaneys-defense-of-cfpb-board-upheaval-im-trying-to-fix-leaks?brief=00000158-07c7-d3f4-a9f9-37df9bc10000">preventing leaks</a> – all of which didn’t add up or weren’t backed by evidence. Mulvaney’s spokesperson even <a href="https://www.americanbanker.com/news/mulvaney-makes-it-official-fires-cfpb-advisory-board-members">charged</a> that the complaining committee members were more interested in protecting their taxpayer-funded trips to Washington than in protecting consumers, a charge that was belied by the fact that some members <a href="https://www.washingtonpost.com/news/business/wp/2018/06/06/mick-mulvaney-fires-members-of-cfpb-advisory-board/?noredirect=on&utm_term=.89c2c50409a3">offered</a> to pay their own way. </p>
<h2>The next director</h2>
<p>Many are wondering what will change once the president’s nomination to helm the bureau, Kathy Kraninger, is confirmed. We can’t be certain, because Kraninger has never spoken publicly about her views on consumer protection, but, given that she serves as Mulvaney’s deputy, I fear the answer is not much.</p>
<p>Many observers were <a href="http://thehill.com/regulation/finance/392904-trump-surprises-with-consumer-agency-pick">surprised</a> by the pick of Kraninger, who is not known to have any experience with the laws that the bureau enforces and interprets.</p>
<p>You might think that’s not a big deal. After all, how difficult can it be to master consumer law, which ought to be readily understandable by consumers? </p>
<p>But the truth is that consumer law is <a href="https://www.wisbar.org/NewsPublications/WisconsinLawyer/Pages/Article.aspx?Volume=90&Issue=8&ArticleID=25822*">often terribly complex</a>. I still learn new things about consumer law every week, and I’ve been teaching it for 30 years.</p>
<p>Kraininger’s supporters have <a href="https://www.wsj.com/articles/kathy-kraninger-to-be-nominated-to-head-cfpb-1529183308?tesla=y">noted</a> that she acquired considerable managerial experience as an associate director at the Office of Management and Budget and deputy assistant secretary at the Department of Homeland Security. That may help her with management issues, but it’s hard to see how it will help her make decisions about which cases to bring or what protections consumers need. </p>
<p>To make the problem even worse, the CFPB’s jurisdiction is vast. The next director will have to work with laws governing credit cards, bank accounts, mortgages, student loans, car loans, debt collection, consumer leases, payday loans, credit reports, lending discrimination and much more. In short, the director’s work touches the life of nearly every American in multiple ways –which makes it important that the director know what she is doing.</p>
<p>Bureau critics <a href="https://www.consumeraffairs.com/news/cfpb-director-asks-congress-to-reduce-the-agencys-power-040318.html">complain</a> that it is too powerful, making ignorance of the law even more troublesome. In fact, even a conservative commentator has <a href="https://www.wsj.com/articles/kathy-kraninger-to-be-nominated-to-head-cfpb-1529183308?tesla=y">said</a> that Kraninger lacks the needed expertise, <a href="https://www.politico.com/story/2018/06/16/trump-consumer-protection-bureau-kathy-kraninger-650388">comparing</a> her nomination with President George W. Bush’s <a href="https://www.npr.org/2018/03/30/598115811/the-fall-of-harriet-miers-a-cautionary-tale-for-dr-ronny-jackson">ill-fated nomination</a> of Harriet Miers to the Supreme Court in 2005.</p>
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<img alt="" src="https://images.theconversation.com/files/225415/original/file-20180628-117374-1q6drbg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/225415/original/file-20180628-117374-1q6drbg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=436&fit=crop&dpr=1 600w, https://images.theconversation.com/files/225415/original/file-20180628-117374-1q6drbg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=436&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/225415/original/file-20180628-117374-1q6drbg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=436&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/225415/original/file-20180628-117374-1q6drbg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=547&fit=crop&dpr=1 754w, https://images.theconversation.com/files/225415/original/file-20180628-117374-1q6drbg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=547&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/225415/original/file-20180628-117374-1q6drbg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=547&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The president isn’t the only one who has cast a long shadow over the fate of the CFPB.</span>
<span class="attribution"><span class="source">AP Photo/Francisco Seco</span></span>
</figcaption>
</figure>
<h2>Casting a shadow</h2>
<p>Meanwhile, Mulvaney continues to run the CFPB, which is facing new threats to its existence, particularly over whether its structure – intended to shield it from interference from the executive branch – is constitutional. </p>
<p>Early this year, a federal appeals court <a href="https://www.cadc.uscourts.gov/internet/opinions.nsf/B7623651686D60D585258226005405AC/%24file/15-1177.pdf">ruled</a> that it was. In mid-June, a federal trial court in New York disagreed and <a href="https://www.citizen.org/sites/default/files/consumer-financial-protection-bureau-et-al-v-rd-legal-funding-llc.pdf">called</a> the CFPB’s design entirely unconstitutional.</p>
<p>While that court’s decision does not bind others, it casts a shadow over the CFPB and could encourage more lawsuits. </p>
<p>As for consumers, for now they will have to seek protection elsewhere than in this once-great consumer protection agency.</p>
<p><em>This article incorporates some material from a <a href="https://theconversation.com/why-we-need-to-save-the-consumer-financial-protection-bureau-80353">2017 article</a> written by the author along with Gina M. Calabrese and Ann L. Goldweber.</em></p><img src="https://counter.theconversation.com/content/98842/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jeff Sovern, together with three other then-employees of St. John's University, received a $29,510 grant from the American Association for Justice Robert L. Habush Endowment and a grant from the St. John’s University School of Law Hugh L. Carey Center for Dispute Resolution in 2014 to study arbitration. It resulted in an article. Along with Professor Kate Walton, he received a grant from the National Conference of Bankruptcy Judges Endowment for Education to study debt collection, resulting in another article. He is a member of the National Association of Consumer Advocates.</span></em></p>The president recently nominated a new permanent director to take over the Consumer Financial Protection Bureau. With the CFPB doing a fraction of the work it did under Obama, what kind of agency will she lead?Jeff Sovern, Professor of Law, St. John's UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/913012018-02-08T11:21:05Z2018-02-08T11:21:05ZConsumers are biggest losers of Trump’s ongoing war on regulations<figure><img src="https://images.theconversation.com/files/205371/original/file-20180207-74476-1tg0ftt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Some worry Mick Mulvaney is putting banks before consumers as head of the CFPB. </span> <span class="attribution"><span class="source">Reuters/Yuri Gripas</span></span></figcaption></figure><p>President Donald Trump has been waging a <a href="https://www.politico.com/agenda/story/2018/01/20/trumps-regulatory-experiment-year-one-000620">war on regulation</a> since he got into office on the ground that government red tape costs the economy billions of dollars a year. </p>
<p>Among the victors in this battle have been energy companies, banks and the president himself, who <a href="https://www.nytimes.com/2017/12/14/us/politics/trump-federal-regulations.html">recently promised</a> he’s “just getting started.” Perhaps the biggest losers, however, have been consumers. </p>
<p>The best illustration of this is the <a href="http://www.latimes.com/opinion/editorials/la-ed-cfpb-mulvaney-payday-20180207-story.html">neutering</a> of the <a href="https://www.consumerfinance.gov/">Consumer Financial Protection Bureau</a>, which began immediately after Mick Mulvaney stepped in as interim director in November.</p>
<p>So how much harm could he do in two short months? As someone who has written about consumer law for more than 30 years, let me count the ways.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/205387/original/file-20180207-74512-qwsfe2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/205387/original/file-20180207-74512-qwsfe2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/205387/original/file-20180207-74512-qwsfe2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/205387/original/file-20180207-74512-qwsfe2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/205387/original/file-20180207-74512-qwsfe2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/205387/original/file-20180207-74512-qwsfe2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/205387/original/file-20180207-74512-qwsfe2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Mick Mulvaney is governing the CFPB very differently than his predecessor.</span>
<span class="attribution"><span class="source">AP Photo/Alex Brandon</span></span>
</figcaption>
</figure>
<h2>‘Pushing the envelope’</h2>
<p>The Consumer Financial Protection Bureau may be best known for levying a <a href="https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-fines-wells-fargo-100-million-widespread-illegal-practice-secretly-opening-unauthorized-accounts/">US$100 million fine</a> against Wells Fargo in 2016 after the bank opened millions of unauthorized accounts. </p>
<p>But the bureau, <a href="https://www.washingtonpost.com/news/wonk/wp/2014/01/11/a-watchdog-grows-up-the-inside-story-of-the-consumer-financial-protection-bureau/">originally conceived</a> by Sen. Elizabeth Warren, has done <a href="https://theconversation.com/why-we-need-to-save-the-consumer-financial-protection-bureau-80353">so much more</a> since Congress created the independent agency in 2010. Under Mulvaney’s predecessor, Richard Cordray, the bureau moved forcefully when it concluded companies had cheated consumers. </p>
<p>Through last summer, the bureau <a href="https://www.consumerfinance.gov/">recovered</a> nearly $12 billion for more than 29 million consumer victims of everything from <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-subprime-credit-card-company-to-refund-2-7-million-for-charging-illegal-credit-card-fees/">illegal credit card fees</a> to <a href="https://www.consumerfinance.gov/about-us/blog/ally-to-repay-80-million-to-consumers-it-discriminated-against/">auto lenders that discriminated against people of color</a>. In 2016 alone, the bureau <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3072545">announced</a> 42 new enforcement actions, or nearly four new cases a month.</p>
<p>Mulvaney, who is also Trump’s budget director, <a href="https://www.wsj.com/articles/the-cfpb-has-pushed-its-last-envelope-1516743561">argued</a> his predecessor’s governing philosophy was to “push the envelope” in pursuing the bureau’s mission. Mulvaney, Trump and other Republicans <a href="https://www.bostonglobe.com/news/nation/2017/02/17/the-white-house-wants-fire-consumer-protection-head-but-political-and-legal-hurdles-make-tricky/joh8Y01GNPypcOuCyOhMsN/story.html">argue that the CFPB director</a> – who can’t be easily removed by the president – has too much <a href="https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=401752">power</a>, making the bureau a prime target in their goal to eliminate regulation they believe puts a strain on the economy and small businesses. </p>
<p>While Cordray had <a href="https://alliedprogress.org/news/mulvaney-retract-wsj-op-ed-apologize-cfpb-staff/">previously never used</a> the “push the envelope” language in describing his mission, he reacted to Mulvaney’s charge by embracing it, tweeting that he did “push hard to see that people are treated fairly by big banks, debt collectors and payday lenders.” </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"956195528034914304"}"></div></p>
<p>It seems unlikely that the bureau would take on a bank like Wells Fargo for similar fraudulent conduct or pursue many of Cordray’s other actions now that Mulvaney is in charge. His boss has even praised a <a href="https://www.congress.gov/bill/115th-congress/house-bill/10/text">bill</a> passed by the House that would strip the CFPB of the authority to go after banks for doing what Wells Fargo did, while Mulvaney himself has <a href="https://www.congress.gov/bill/114th-congress/house-bill/3118/cosponsors?overview=closed#tabs">co-sponsored legislation</a> aimed at killing the bureau.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/205388/original/file-20180207-74512-ti8o76.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/205388/original/file-20180207-74512-ti8o76.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=457&fit=crop&dpr=1 600w, https://images.theconversation.com/files/205388/original/file-20180207-74512-ti8o76.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=457&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/205388/original/file-20180207-74512-ti8o76.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=457&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/205388/original/file-20180207-74512-ti8o76.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=574&fit=crop&dpr=1 754w, https://images.theconversation.com/files/205388/original/file-20180207-74512-ti8o76.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=574&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/205388/original/file-20180207-74512-ti8o76.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=574&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Former CFPB Director Richard Cordray, center, embraced the idea that he ‘pushed the envelope’ to protect consumers.</span>
<span class="attribution"><span class="source">AP Photo/Steve Helber</span></span>
</figcaption>
</figure>
<h2>A new governing mission</h2>
<p>While Mulvaney <a href="https://www.documentcloud.org/documents/4357880-Mulvaney-Memo.html">agrees</a> that the bureau’s job includes protecting consumers such as credit card users, he says it also works for credit card issuers – despite the fact that its very name states that it exists to protect consumers, not banks. </p>
<p>One reason Congress wanted an agency to protect consumers was because <a href="http://www.nytimes.com/2007/12/18/business/18subprime.html">existing bank regulators</a> in the run-up to the Great Recession had not only failed to prevent predatory lenders from taking advantage of consumers, thus contributing to the subprime fiasco, but at least one <a href="http://www.washingtonpost.com/wp-dyn/content/article/2008/02/13/AR2008021302783.html?hpid=opinionsbox1">even protected them</a>. I believe the U.S. already has enough bank protection agencies, from the Federal Reserve to the Office of the Comptroller of the Currency, without adding the bureau to the list.</p>
<p>In January, Mulvaney <a href="https://www.documentcloud.org/documents/4357880-Mulvaney-Memo.html">told his staff</a> that the bureau’s actions should be guided by how many complaints it receives on a particular matter. </p>
<p>By that measure, the CFPB wouldn’t have gone after Wells Fargo because <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2961347">few consumers</a> seem to have complained to the bureau about the unauthorized Wells accounts. That may be because consumers often don’t bother to <a href="http://pubcit.typepad.com/clpblog/2017/07/guess-how-many-public-complaints-to-the-cfpb-complaint-database-about-wells-fargo-unauthorized-accou.html">complain</a> when they have suffered only a small loss. And yet collectively the Wells customers had much at stake, as demonstrated by the fact that Wells has agreed to settle the case for <a href="http://www.latimes.com/business/la-fi-wells-settlement-plan-20170421-story.html">$142 million</a>, a number that may yet grow. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/205390/original/file-20180207-74512-4p5wd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/205390/original/file-20180207-74512-4p5wd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/205390/original/file-20180207-74512-4p5wd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/205390/original/file-20180207-74512-4p5wd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/205390/original/file-20180207-74512-4p5wd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/205390/original/file-20180207-74512-4p5wd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/205390/original/file-20180207-74512-4p5wd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Sally Greenberg, with the National Consumers League, is among the groups that have voiced strong opposition to Mulvaney taking over the bureau.</span>
<span class="attribution"><span class="source">AP Photo/Jacquelyn Martin</span></span>
</figcaption>
</figure>
<h2>Enforcement – or lack thereof</h2>
<p>So what has Mulvaney actually done since taking over?</p>
<p>While he <a href="https://www.documentcloud.org/documents/4357880-Mulvaney-Memo.html">pledged</a> to be vigorous and consistent in <a href="http://pubcit.typepad.com/clpblog/2017/12/why-did-the-cfpb-eliminate-fair-enforcement-of-the-rules-from-its-description-of-itself.html">enforcement</a> of federal consumer financial law, he has also said that the bureau should bring cases <a href="https://www.wsj.com/articles/the-cfpb-has-pushed-its-last-envelope-1516743561?mod=searchresults&page=1&pos=2">reluctantly</a>. As such, you might wonder how many he is actually filing.</p>
<p>The answer would be none.</p>
<p>The bureau has instead <a href="https://www.bloomberg.com/news/articles/2018-01-18/trump-led-cfpb-signals-shift-by-dropping-payday-lender-lawsuit">dropped</a> a case, without explanation, against a group of payday lenders that charged consumers as much as 950 percent interest a year. </p>
<p>It also terminated at least one investigation, though we can’t know for sure how many it has ended because the bureau usually doesn’t publicly announce such actions. </p>
<p>That investigation was against a <a href="https://alliedprogress.org/news/breaking-mulvaney-drops-cfpb-case-predatory-lender-gave-thousands/">company that had made several campaign donations to Mulvaney</a>. A <a href="https://www.propublica.org/article/high-cost-lender-world-finance-target-of-federal-probe">ProPublica investigation</a> previously reported that the installment lender, World Acceptance Corp., trapped consumers in a cycle of debt with deceptively expensive loans.</p>
<p>We can’t know whether Cordray himself would have eventually ended that investigation anyway and thus determine if its termination was the result of a lack of evidence. But we can be fairly certain that he wouldn’t have done what Mulvaney did around the same time: say, he may <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-statement-payday-rule/">reconsider</a> a rule intended to keep payday customers from falling into endless debt traps. That rule took the unremarkable step of requiring lenders, before extending some loans, to verify that borrowers can repay the debt. </p>
<p>Another noteworthy move by Mulvaney concerns the CFPB’s Fair Lending Office. The law that originally set up the bureau <a href="https://www.gpo.gov/fdsys/pkg/PLAW-111publ203/html/PLAW-111publ203.htm">tasked this office</a> with enforcing laws prohibiting discriminatory lending. He <a href="https://www.inman.com/2018/02/02/mulvaney-revokes-powers-of-cfpb-fair-lending-office/">has revoked</a> that power, suggesting that preventing discrimination on the basis of race and gender will now be less important at the bureau. </p>
<p>For the next five months – or until the Senate confirms a permanent director – the CFPB is led by someone who once called it a <a href="https://www.bloomberg.com/news/articles/2017-11-16/trump-is-said-to-consider-naming-mulvaney-to-start-cfpb-revamp?utm_content=politics&utm_campaign=socialflow-organic&utm_source=twitter&utm_medium=social&cmpid%3D=socialflow-twitter-politics">“sad, sick” joke</a>. </p>
<p>What is sad and sick, in my view, is that an agency established to protect consumers may be more eager to protect predatory lenders than consumers. And that is no joke.</p><img src="https://counter.theconversation.com/content/91301/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jeff Sovern received a $29,510 grant from the American Association for Justice Robert L. Habush Endowment and by a grant from the St. John’s University School of Law Hugh L. Carey Center for Dispute Resolution in 2014 to study arbitration. It resulted in an article. Along with Professor Kate Walton, he received a grant from the National Conference of Bankruptcy Judges Endowment for Education to study debt collection, resulting in another article. He is a member of the National Association of Consumer Advocates.</span></em></p>Mick Mulvaney has only been in charge of the Consumer Financial Protection Bureau for two months, but he’s already made many decisions that will leave consumers worse off.Jeff Sovern, Professor of Law, St. John's UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/875732017-11-16T01:35:37Z2017-11-16T01:35:37ZWhy we need to save the Consumer Financial Protection Bureau<figure><img src="https://images.theconversation.com/files/194863/original/file-20171115-19836-1sajsrv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Consumer Financial Protection Bureau Director Richard Cordray, center, plans to step down at the end of the month.</span> <span class="attribution"><span class="source">AP Photo/Steve Helber</span></span></figcaption></figure><p>Republicans in <a href="https://www.forbes.com/sites/jimhenry/2017/05/30/congressional-critics-gunning-for-consumer-financial-protection-bureau/#24b1e09167ab">Congress</a> and the <a href="https://consumerist.com/2017/03/20/white-house-wants-authority-to-fire-consumer-protection-chief/">White House</a> have been very blunt about their desire to gut the <a href="https://www.consumerfinance.gov">Consumer Financial Protection Bureau</a> – and the threats to it are mounting. </p>
<p>The agency was launched in 2011 in the aftermath of the financial crisis as part of the <a href="https://www.sec.gov/about/laws/wallstreetreform-cpa.pdf">Dodd-Frank Wall Street Reform and Consumer Protection Act</a>. The goal was to protect consumers from deceptive or misleading practices in the financial industry. </p>
<p>At the moment, Republicans <a href="https://www.washingtonpost.com/news/wonk/wp/2017/10/24/wall-street-wins-big-as-senate-votes-to-roll-back-regulation-allowing-consumers-to-sue-their-banks/?hpid=hp_hp-more-top-stories_senatecredit-1055pm%3Ahomepage%2Fstory&utm_term=.57193830f520">seem focused</a> on blocking CFPB rules they don’t like, such as <a href="http://thehill.com/policy/finance/341313-consumer-bureau-releases-rule-to-prevent-banks-credit-card-firms-from-blocking">one that would have prevented</a> the use of arbitration clauses in financial contracts, making it easier for people to band together to sue banks for wrongdoing. </p>
<p>The Trump administration, which <a href="https://www.washingtonpost.com/news/wonk/wp/2017/10/23/treasury-department-sides-with-wall-street-opposes-elimination-of-mandatory-arbitration-clauses/?utm_term=.d70f3d07d92c">has been heavily critical</a> of the CFPB, now has an opportunity to reshape it from the top because its founding director, Richard Cordray, <a href="https://www.washingtonpost.com/news/business/wp/2017/11/15/richard-cordray-is-stepping-down-as-head-of-consumer-financial-protection-bureau/?utm_term=.3c363ba31d13">plans to step down by the end of November</a>. </p>
<p>So what would you miss if the agency suddenly disappeared or was weakened?</p>
<p>In short, a lot. We base this conclusion on the work the three of us have done in recent decades. One of us (Sovern) has been writing about consumer law for more than 30 years, while the other two of us direct a <a href="http://www.stjohns.edu/law/consumer-justice-elderly-litigation-clinic">legal clinic that represents elderly consumers</a>. We’ve seen the worst of what financial companies can do, and we’ve also witnessed how the CFPB has begun to reverse the tide. </p>
<h2>Life before CFPB</h2>
<p>If you are one of the more than 29 million consumers who have collectively <a href="https://www.consumerfinance.gov/">received nearly US$12 billion</a> back from misbehaving financial institutions because of the CFPB’s efforts, you already know its value. But even if you are not, you have probably benefited from the bureau’s existence.</p>
<p>Before Congress created the bureau, there was no federal agency that made consumer financial protection its sole mission. Rather, consumer protection was rolled into the missions of a bunch of different agencies. And, as we saw during the financial crisis, regulators often gave it a back seat.</p>
<p>Congress, for example, gave the Federal Reserve the <a href="https://www.federalreserve.gov/reportforms/formsreview/RegZ_20080730_ffr.pdf">power to bar unfair and deceptive mortgage lending</a> in 1994. Yet the central bank considered consumer protection a backwater and didn’t use that power until 2008 – too late to prevent the <a href="https://theconversation.com/us/topics/great-recession-13707">Great Recession</a>. Congress took it away two years later when it passed Dodd-Frank.</p>
<p>The Office of the Comptroller of the Currency regulates banks but was so preoccupied with ensuring lenders were safe that it failed to protect consumers from their predatory subprime mortgages – so much so that it prevented states from doing so too. And now President Trump has put a former bank lawyer in charge of it. The Federal Trade Commission, which is tasked with fighting deceptive business practices, lacked the power to prevent such <a href="https://www.federalreservehistory.org/essays/subprime_mortgage_crisis">dangerous lending</a>.</p>
<p>This meant consumer protection on financial matters fell through the cracks. </p>
<p><a href="https://theconversation.com/how-wells-fargo-encouraged-employees-to-commit-fraud-66615">Wells Fargo’s recent fraud scandal</a> is a case in point. In the early 2000s, Wells Fargo employees <a href="https://www08.wellsfargomedia.com/assets/pdf/about/investor-relations/presentations/2017/board-report.pdf">began opening fake accounts</a> in clients’ names without permission, leading in some cases to <a href="https://www.wsj.com/articles/wells-fargo-is-trying-to-fix-its-rogue-account-scandal-one-grueling-case-at-a-time-1482855852?mg=prod/accounts-wsj%20rt5y7u6">lower credit scores</a> and a variety of fees. The bank <a href="https://dx.doi.org/10.2139/ssrn.2516432">ultimately opened millions of fraudulent bank and credit card accounts</a> before the scheme came to an end last year. </p>
<p>But as early as 2010, before the CFPB was set up, regulators at the OCC were increasingly aware of what was happening at Wells Fargo thanks to hundreds of <a href="https://theconversation.com/why-companies-like-wells-fargo-ignore-their-whistleblowers-at-their-peril-67501">whistleblower complaints</a>. The OCC even confronted the bank, yet failed to take any action despite many red flags, according to an <a href="https://www.occ.gov/publications/publications-by-type/other-publications-reports/pub-wells-fargo-supervision-lessons-learned-41917.pdf">internal audit</a>. </p>
<p>It wasn’t until the <a href="http://freepdfhosting.com/29677883a9.pdf">Los Angeles city attorney</a> and the <a href="https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-fines-wells-fargo-100-million-widespread-illegal-practice-secretly-opening-unauthorized-accounts/">CFPB became involved</a> years later that Wells Fargo took forceful action to stop the fraud. The regulators <a href="https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-fines-wells-fargo-100-million-widespread-illegal-practice-secretly-opening-unauthorized-accounts/">fined Wells Fargo a total of $185 million</a> and forced it to refund fees it had charged customers and hire an independent consultant to review its procedures. </p>
<p>More importantly, they sent a clear message to other financial institutions: Cheat consumers and you will face the consequences.</p>
<h2>Protecting consumers</h2>
<p>Since its inception, the bureau has acted repeatedly to stop financial institutions from harming consumers. </p>
<p>It blocked debt collector attorneys from <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-takes-action-halt-illegal-debt-collection-practices-lawsuit-mill-and-debt-buyer/">suing consumers based on false information</a>. It discovered systemic problems with consumer credit reports and forced companies to <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-oversight-uncovers-and-corrects-credit-reporting-problems/">correct errors</a>. It compelled credit card companies to <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-subprime-credit-card-company-to-refund-2-7-million-for-charging-illegal-credit-card-fees/">refund illegal fees</a>. It protected borrowers from <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-sues-nations-largest-student-loan-company-navient-failing-borrowers-every-stage-repayment/">unlawful student loan servicing practices</a>. It <a href="https://www.consumerfinance.gov/about-us/blog/ally-to-repay-80-million-to-consumers-it-discriminated-against/">made lenders repay</a> consumers they discriminated against. It <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-recovers-more-than-1-million-for-servicemembers-veterans-and-their-families/">recovered money for veterans</a> who complained of abusive financial practices. </p>
<p>When the bureau began publishing <a href="https://www.consumerfinance.gov/data-research/consumer-complaints/">consumer complaints on its website</a>, companies that might previously have ignored negative feedback paid attention. Financial institutions have responded to complaints to the CFPB <a href="https://www.consumerfinance.gov/data-research/consumer-complaints/">more than 700,000 times</a>, often by providing a remedy to the consumers.</p>
<p>Besides protecting consumers, however, Congress had a second motive in creating the bureau: to help prevent the kind of mortgage lending that helped cause the Great Recession. </p>
<p>To that end, the bureau has adopted <a href="https://www.consumerfinance.gov/policy-compliance/rulemaking/final-rules/2013-integrated-mortgage-disclosure-rule-under-real-estate-settlement-procedures-act-regulation-x-and-truth-lending-act-regulation-z/">rules</a> that help consumers to understand their mortgages – something that often <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1531781">wasn’t possible</a> under the previously misleading mortgage disclosures. It also issued <a href="https://www.consumerfinance.gov/policy-compliance/rulemaking/final-rules/ability-repay-and-qualified-mortgage-standards-under-truth-lending-act-regulation-z/">regulations</a> to prevent consumers from taking out mortgages that they couldn’t repay. And after borrowers take out a mortgage, <a href="https://www.consumerfinance.gov/policy-compliance/rulemaking/final-rules/2013-real-estate-settlement-procedures-act-regulation-x-and-truth-lending-act-regulation-z-mortgage-servicing-final-rules/">CFPB servicing rules</a> establish the procedures servicers must follow when communicating with borrowers, correcting errors, providing information and dealing with loan modification requests.</p>
<p>Two of us have personal experience with one of the bureau’s new mortgage rules, which powerfully illustrates the value of the CFPB.</p>
<p>In 2014, Alice, a client of our law school clinic, was struggling to pay the mortgage on her home – which she had refinanced a few years earlier – after a stroke forced her into retirement. <a href="http://www.stjohns.edu/law/consumer-justice-elderly-litigation-clinic">Our clinic</a> helped her apply for a modification of her loan. </p>
<p>But within weeks, instead of acknowledging Alice’s application, the loan servicer summoned her to court to begin foreclosure proceedings in violation of <a href="https://www.law.cornell.edu/cfr/text/12/1024.41">CFPB servicing rules</a>. Fortunately, our clinic was able to rely on those rules in getting the foreclosure action dismissed. Alice got her loan modified and remains in her home. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/177630/original/file-20170710-5982-qs3jpp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/177630/original/file-20170710-5982-qs3jpp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=482&fit=crop&dpr=1 600w, https://images.theconversation.com/files/177630/original/file-20170710-5982-qs3jpp.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=482&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/177630/original/file-20170710-5982-qs3jpp.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=482&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/177630/original/file-20170710-5982-qs3jpp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=606&fit=crop&dpr=1 754w, https://images.theconversation.com/files/177630/original/file-20170710-5982-qs3jpp.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=606&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/177630/original/file-20170710-5982-qs3jpp.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=606&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Demonstrators tried to draw attention to the subprime mortgage crisis back in early 2008.</span>
<span class="attribution"><span class="source">AP Photo/Matt Rourke</span></span>
</figcaption>
</figure>
<h2>Protecting the vulnerable</h2>
<p>This reveals how the bureau is particularly important to protect vulnerable consumers, like the elderly, who are frequently targeted by fraudsters and predatory lenders because of their cognitive and other impairments and because they often have accumulated substantial assets. The CFPB is the only federal agency with an office <a href="https://www.consumerfinance.gov/educational-resources/resources-for-older-adults/">specifically dedicated</a> to protecting the financial well-being of older adults. </p>
<p>The bureau has brought cases against companies that attempted to take advantage of seniors by, for example, <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-and-new-york-department-of-financial-services-sue-pension-advance-companies-for-deceiving-consumers-about-loan-costs/">misrepresenting the interest rates</a> on pension advance loans or <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-takes-action-against-reverse-mortgage-companies-deceptive-advertising/">deceptive advertising</a>. In 2015 alone, consumer complaints to the CFPB brought relief to <a href="https://data.consumerfinance.gov/dataset/Consumer-Complaints/s6ew-h6mp">more than 600 older Americans just through debt collection problems</a>.</p>
<p>The bureau has also worked to prevent financial abuse of the elderly, estimated to cost seniors <a href="https://www.truelinkfinancial.com/research">as much as $36 billion annually</a>. The CFPB has educated <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-issues-advisory-and-report-for-financial-institutions-on-preventing-elder-financial-abuse/">financial institutions</a>, <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-helps-assisted-living-and-nursing-facilities-protect-seniors-from-financial-abuse/">nursing facilities</a> and <a href="https://www.consumerfinance.gov/about-us/newsroom/director-cordray-remarks-on-money-smart-for-older-adults/">others</a> about recognizing and stopping elder financial abuse and exploitation.</p>
<h2>Consumer protection in peril</h2>
<p>Given Alice’s ill health, the consequences for her might have been disastrous if she had been thrown out of her home. But now she – and all of us – face the loss of the CFPB’s aid. </p>
<p>The CFPB <a href="http://www.latimes.com/business/la-fi-cfpb-cordray-hearing-20170405-story.html">is under attack</a> from Republican members of Congress who <a href="https://banks.house.gov/media/press-releases/banks-votes-choice-act-roll-back-dodd-frank-law">believe more in lifting bank regulations</a> than in protecting consumers. Some members have <a href="http://pubcit.typepad.com/clpblog/2017/02/ratcliffecruz-bill-would-eliminate-the-cfpb.html">proposed eliminating the agency altogether</a>. </p>
<p>The House of Representatives <a href="https://financialservices.house.gov/choice/">has passed a bill</a> that would cripple the CFPB by, for example, taking away the power it used to fine Wells Fargo for opening illegal accounts and concealing <a href="https://www.consumerfinance.gov/data-research/consumer-complaints/">its complaint database</a> from public view. In other words, it would force the bureau to sit idly by as financial institutions <a href="http://www.newsweek.com/your-bank-lying-you-619814">lie to consumers</a>. </p>
<p>Even if the bureau survives, it may be less protective of consumers when current director Richard Cordray leaves, which he said he plans to do by the end of the month. Then we might see a former banker or bank lawyer put in charge, just as has happened at the Treasury Department and comptroller’s office. Those officials opposed the CFPB’s arbitration rule and seem far less interested in protecting consumers than Cordray. It is even possible that Treasury Secretary Steve Mnuchin himself <a href="https://www.newyorker.com/business/currency/what-is-the-fate-of-the-consumer-financial-protection-bureau">might become</a> the interim leader of the CFPB.</p>
<p>Nearly every American has or will have a loan or bank account, a prepaid card, credit card, a credit report or some combination of those, and so has dealings with a financial institution policed by the CFPB. But <a href="http://press.princeton.edu/titles/10267.html">few of us read the fine print</a> governing these things or <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2516432">can understand it when we do</a>. That gives the companies that write these agreements the ability to draft them to suit their own interests at the expense of consumers. </p>
<p>Similarly, we do not always know when a financial institution takes advantage of us, just as Wells Fargo customers did not always know that it had opened unauthorized accounts that lowered their credit scores. </p>
<p>Consumers need protection from misbehaving companies. If the bureau is eliminated, significantly weakened or starts protecting banks rather than consumers, all consumers will suffer.</p>
<p><em>This is an updated version of an article originally published on July 10, 2017.</em></p><img src="https://counter.theconversation.com/content/87573/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Along with three co-authors, Jeff Sovern received a $29,510 grant from the American Association for Justice Robert L. Habush Endowment and by a grant from the St. John’s University School of Law Hugh L. Carey Center for Dispute Resolution in 2014 to study arbitration. It resulted in an article. Along with Professor Kate Walton, he received a grant from the National Conference of Bankruptcy Judges Endowment for Education to study debt collection, resulting in another article. He is a member of the National Association of Consumer Advocates.
</span></em></p><p class="fine-print"><em><span>Ann L. Goldweber is affiliated with NACA as a member.
</span></em></p><p class="fine-print"><em><span>Gina M. Calabrese is affiliated with the National Association of Consumer Advocates, New Yorkers for Responsible Lending, and the Association of the Bar of the City of New York (former chair, Committee on the Civil Court).
</span></em></p>The decision by the bureau’s founding director to step down this month offers Republicans and the Trump administration a chance to finally gut the bureau they’ve long despised.Jeff Sovern, Professor of Law, St. John's UniversityAnn L. Goldweber, Professor of Clinical Education, St. John's UniversityGina M. Calabrese, Professor of Clinical Education, St. John's UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/863792017-10-25T23:40:16Z2017-10-25T23:40:16ZWhy we need to save the Consumer Financial Protection Bureau<p>Republicans in <a href="https://www.forbes.com/sites/jimhenry/2017/05/30/congressional-critics-gunning-for-consumer-financial-protection-bureau/#24b1e09167ab">Congress</a> and the <a href="https://consumerist.com/2017/03/20/white-house-wants-authority-to-fire-consumer-protection-chief/">White House</a> have been very blunt about their desire to gut the <a href="https://www.consumerfinance.gov">Consumer Financial Protection Bureau</a> – and the threats to it are mounting. </p>
<p>The agency was launched in 2011 in the aftermath of the financial crisis as part of the <a href="https://www.sec.gov/about/laws/wallstreetreform-cpa.pdf">Dodd-Frank Wall Street Reform and Consumer Protection Act</a>. The goal was to protect consumers from deceptive or misleading practices in the financial industry. </p>
<p>At the moment, Republicans <a href="https://www.washingtonpost.com/news/wonk/wp/2017/10/24/wall-street-wins-big-as-senate-votes-to-roll-back-regulation-allowing-consumers-to-sue-their-banks/?hpid=hp_hp-more-top-stories_senatecredit-1055pm%3Ahomepage%2Fstory&utm_term=.57193830f520">seem focused</a> on blocking CFPB rules they don’t like, such as <a href="http://thehill.com/policy/finance/341313-consumer-bureau-releases-rule-to-prevent-banks-credit-card-firms-from-blocking">one that would have prevented</a> the use of arbitration clauses in financial contracts, making it easier for people to band together to sue banks for wrongdoing. Separately, the Trump administration <a href="https://www.washingtonpost.com/news/wonk/wp/2017/10/23/treasury-department-sides-with-wall-street-opposes-elimination-of-mandatory-arbitration-clauses/?utm_term=.d70f3d07d92c">has been heavily critical</a> of the CFPB, and its director <a href="https://www.reuters.com/article/us-cfpb-cordray/u-s-consumer-watchdog-chief-cordray-tests-ohios-election-waters-idUSKCN1BF1N5">is said to be considering leaving</a> before his term expires next July, which would allow the president to pick his replacement. </p>
<p>So what would you miss if the agency suddenly disappeared or got gutted?</p>
<p>In short, a lot. We base this conclusion on the work the three of us have done in recent decades. One of us (Sovern) has been writing about consumer law for more than 30 years, while the other two of us direct a <a href="http://www.stjohns.edu/law/consumer-justice-elderly-litigation-clinic">legal clinic that represents elderly consumers</a>. We’ve seen the worst of what financial companies can do, and we’ve also witnessed how the CFPB has begun to reverse the tide. </p>
<h2>Life before CFPB</h2>
<p>If you are one of the more than 29 million consumers who have collectively <a href="https://www.consumerfinance.gov/">received nearly US$12 billion</a> back from misbehaving financial institutions because of the CFPB’s efforts, you already know its value. But even if you are not, you have probably benefited from the bureau’s existence.</p>
<p>Before Congress created the bureau, there was no federal agency that made consumer financial protection its sole mission. Rather, consumer protection was rolled into the missions of a bunch of different agencies. And, as we saw during the financial crisis, regulators often gave it a back seat.</p>
<p>Congress, for example, gave the Federal Reserve the <a href="https://www.federalreserve.gov/reportforms/formsreview/RegZ_20080730_ffr.pdf">power to bar unfair and deceptive mortgage lending</a> in 1994. Yet the central bank considered consumer protection a backwater and didn’t use that power until 2008 – too late to prevent the <a href="https://theconversation.com/us/topics/great-recession-13707">Great Recession</a>. Congress took it away two years later when it passed Dodd-Frank.</p>
<p>The Office of the Comptroller of the Currency regulates banks but was so preoccupied with ensuring lenders were safe that it failed to protect consumers from their predatory subprime mortgages – so much so that it prevented states from doing so too. And now President Trump has put a former bank lawyer in charge of it. The Federal Trade Commission, which is tasked with fighting deceptive business practices, lacked the power to prevent such <a href="https://www.federalreservehistory.org/essays/subprime_mortgage_crisis">dangerous lending</a>.</p>
<p>This meant consumer protection on financial matters fell through the cracks. </p>
<p><a href="https://theconversation.com/how-wells-fargo-encouraged-employees-to-commit-fraud-66615">Wells Fargo’s recent fraud scandal</a> is a case in point. In the early 2000s, Wells Fargo employees <a href="https://www08.wellsfargomedia.com/assets/pdf/about/investor-relations/presentations/2017/board-report.pdf">began opening fake accounts</a> in clients’ names without permission, leading in some cases to <a href="https://www.wsj.com/articles/wells-fargo-is-trying-to-fix-its-rogue-account-scandal-one-grueling-case-at-a-time-1482855852?mg=prod/accounts-wsj%20rt5y7u6">lower credit scores</a> and a variety of fees. The bank <a href="https://dx.doi.org/10.2139/ssrn.2516432">ultimately opened millions of fraudulent bank and credit card accounts</a> before the scheme came to an end last year. </p>
<p>But as early as 2010, before the CFPB was set up, regulators at the OCC were increasingly aware of what was happening at Wells Fargo thanks to hundreds of <a href="https://theconversation.com/why-companies-like-wells-fargo-ignore-their-whistleblowers-at-their-peril-67501">whistleblower complaints</a>. The OCC even confronted the bank, yet failed to take any action despite many red flags, according to an <a href="https://www.occ.gov/publications/publications-by-type/other-publications-reports/pub-wells-fargo-supervision-lessons-learned-41917.pdf">internal audit</a>. </p>
<p>It wasn’t until the <a href="http://freepdfhosting.com/29677883a9.pdf">Los Angeles city attorney</a> and the <a href="https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-fines-wells-fargo-100-million-widespread-illegal-practice-secretly-opening-unauthorized-accounts/">CFPB became involved</a> years later that Wells Fargo took forceful action to stop the fraud. The regulators <a href="https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-fines-wells-fargo-100-million-widespread-illegal-practice-secretly-opening-unauthorized-accounts/">fined Wells Fargo a total of $185 million</a> and forced it to refund fees it had charged customers and hire an independent consultant to review its procedures. </p>
<p>More importantly, they sent a clear message to other financial institutions: Cheat consumers and you will face the consequences.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/177626/original/file-20170710-5939-45mbev.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/177626/original/file-20170710-5939-45mbev.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=440&fit=crop&dpr=1 600w, https://images.theconversation.com/files/177626/original/file-20170710-5939-45mbev.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=440&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/177626/original/file-20170710-5939-45mbev.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=440&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/177626/original/file-20170710-5939-45mbev.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=553&fit=crop&dpr=1 754w, https://images.theconversation.com/files/177626/original/file-20170710-5939-45mbev.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=553&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/177626/original/file-20170710-5939-45mbev.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=553&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Consumer Financial Protection Bureau Director Richard Cordray testifies on Capitol Hill in 2013.</span>
<span class="attribution"><span class="source">AP Photo/Manuel Balce Ceneta</span></span>
</figcaption>
</figure>
<h2>Protecting consumers</h2>
<p>Since its inception, the bureau has acted repeatedly to stop financial institutions from harming consumers. </p>
<p>It blocked debt collector attorneys from <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-takes-action-halt-illegal-debt-collection-practices-lawsuit-mill-and-debt-buyer/">suing consumers based on false information</a>. It discovered systemic problems with consumer credit reports and forced companies to <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-oversight-uncovers-and-corrects-credit-reporting-problems/">correct errors</a>. It compelled credit card companies to <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-subprime-credit-card-company-to-refund-2-7-million-for-charging-illegal-credit-card-fees/">refund illegal fees</a>. It protected borrowers from <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-sues-nations-largest-student-loan-company-navient-failing-borrowers-every-stage-repayment/">unlawful student loan servicing practices</a>. It <a href="https://www.consumerfinance.gov/about-us/blog/ally-to-repay-80-million-to-consumers-it-discriminated-against/">made lenders repay</a> consumers they discriminated against. It <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-recovers-more-than-1-million-for-servicemembers-veterans-and-their-families/">recovered money for veterans</a> who complained of abusive financial practices. </p>
<p>When the bureau began publishing <a href="https://www.consumerfinance.gov/data-research/consumer-complaints/">consumer complaints on its website</a>, companies that might previously have ignored negative feedback paid attention. Financial institutions have responded to complaints to the CFPB <a href="https://www.consumerfinance.gov/data-research/consumer-complaints/">more than 700,000 times</a>, often by providing a remedy to the consumers.</p>
<p>Besides protecting consumers, however, Congress had a second motive in creating the bureau: to help prevent the kind of mortgage lending that helped cause the Great Recession. </p>
<p>To that end, the bureau has adopted <a href="https://www.consumerfinance.gov/policy-compliance/rulemaking/final-rules/2013-integrated-mortgage-disclosure-rule-under-real-estate-settlement-procedures-act-regulation-x-and-truth-lending-act-regulation-z/">rules</a> that help consumers to understand their mortgages – something that often <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1531781">wasn’t possible</a> under the previously misleading mortgage disclosures. It also issued <a href="https://www.consumerfinance.gov/policy-compliance/rulemaking/final-rules/ability-repay-and-qualified-mortgage-standards-under-truth-lending-act-regulation-z/">regulations</a> to prevent consumers from taking out mortgages that they couldn’t repay. And after borrowers take out a mortgage, <a href="https://www.consumerfinance.gov/policy-compliance/rulemaking/final-rules/2013-real-estate-settlement-procedures-act-regulation-x-and-truth-lending-act-regulation-z-mortgage-servicing-final-rules/">CFPB servicing rules</a> establish the procedures servicers must follow when communicating with borrowers, correcting errors, providing information and dealing with loan modification requests.</p>
<p>Two of us have personal experience with one of the bureau’s new mortgage rules, which powerfully illustrates the value of the CFPB.</p>
<p>In 2014, Alice, a client of our law school clinic, was struggling to pay the mortgage on her home – which she had refinanced a few years earlier – after a stroke forced her into retirement. <a href="http://www.stjohns.edu/law/consumer-justice-elderly-litigation-clinic">Our clinic</a> helped her apply for a modification of her loan. </p>
<p>But within weeks, instead of acknowledging Alice’s application, the loan servicer summoned her to court to begin foreclosure proceedings in violation of <a href="https://www.law.cornell.edu/cfr/text/12/1024.41">CFPB servicing rules</a>. Fortunately, our clinic was able to rely on those rules in getting the foreclosure action dismissed. Alice got her loan modified and remains in her home. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/177630/original/file-20170710-5982-qs3jpp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/177630/original/file-20170710-5982-qs3jpp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=482&fit=crop&dpr=1 600w, https://images.theconversation.com/files/177630/original/file-20170710-5982-qs3jpp.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=482&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/177630/original/file-20170710-5982-qs3jpp.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=482&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/177630/original/file-20170710-5982-qs3jpp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=606&fit=crop&dpr=1 754w, https://images.theconversation.com/files/177630/original/file-20170710-5982-qs3jpp.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=606&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/177630/original/file-20170710-5982-qs3jpp.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=606&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Demonstrators tried to draw attention to the subprime mortgage crisis back in early 2008.</span>
<span class="attribution"><span class="source">AP Photo/Matt Rourke</span></span>
</figcaption>
</figure>
<h2>Protecting the vulnerable</h2>
<p>This reveals how the bureau is particularly important to protect vulnerable consumers, like the elderly, who are frequently targeted by fraudsters and predatory lenders because of their cognitive and other impairments and because they often have accumulated substantial assets. The CFPB is the only federal agency with an office <a href="https://www.consumerfinance.gov/educational-resources/resources-for-older-adults/">specifically dedicated</a> to protecting the financial well-being of older adults. </p>
<p>The bureau has brought cases against companies that attempted to take advantage of seniors by, for example, <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-and-new-york-department-of-financial-services-sue-pension-advance-companies-for-deceiving-consumers-about-loan-costs/">misrepresenting the interest rates</a> on pension advance loans or <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-takes-action-against-reverse-mortgage-companies-deceptive-advertising/">deceptive advertising</a>. In 2015 alone, consumer complaints to the CFPB brought relief to <a href="https://data.consumerfinance.gov/dataset/Consumer-Complaints/s6ew-h6mp">more than 600 older Americans just through debt collection problems</a>.</p>
<p>The bureau has also worked to prevent financial abuse of the elderly, estimated to cost seniors <a href="https://www.truelinkfinancial.com/research">as much as $36 billion annually</a>. The CFPB has educated <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-issues-advisory-and-report-for-financial-institutions-on-preventing-elder-financial-abuse/">financial institutions</a>, <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-helps-assisted-living-and-nursing-facilities-protect-seniors-from-financial-abuse/">nursing facilities</a> and <a href="https://www.consumerfinance.gov/about-us/newsroom/director-cordray-remarks-on-money-smart-for-older-adults/">others</a> about recognizing and stopping elder financial abuse and exploitation.</p>
<h2>Consumer protection in peril</h2>
<p>Given Alice’s ill health, the consequences for her might have been disastrous if she had been thrown out of her home. But now she – and all of us – face the loss of the CFPB’s aid. </p>
<p>The CFPB <a href="http://www.latimes.com/business/la-fi-cfpb-cordray-hearing-20170405-story.html">is under attack</a> from Republican members of Congress who <a href="https://banks.house.gov/media/press-releases/banks-votes-choice-act-roll-back-dodd-frank-law">believe more in lifting bank regulations</a> than in protecting consumers. Some members have <a href="http://pubcit.typepad.com/clpblog/2017/02/ratcliffecruz-bill-would-eliminate-the-cfpb.html">proposed eliminating the agency altogether</a>. </p>
<p>The House of Representatives <a href="https://financialservices.house.gov/choice/">has passed a bill</a> that would cripple the CFPB by, for example, taking away the power it used to fine Wells Fargo for opening illegal accounts and concealing <a href="https://www.consumerfinance.gov/data-research/consumer-complaints/">its complaint database</a> from public view. In other words, it would force the bureau to sit idly by as financial institutions <a href="http://www.newsweek.com/your-bank-lying-you-619814">lie to consumers</a>. Even if the bureau survives, it may be less protective of consumers when its current director, Richard Cordray, leaves. His term expires next summer, and he may step down even sooner. Then we might see a former banker or bank lawyer put in charge, just as has happened at the Treasury Department and comptroller’s office. </p>
<p>Nearly every American has or will have a loan or bank account, a prepaid card, credit card, a credit report or some combination of those, and so has dealings with a financial institution policed by the CFPB. But <a href="http://press.princeton.edu/titles/10267.html">few of us read the fine print</a> governing these things or <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2516432">can understand it when we do</a>. That gives the companies that write these agreements the ability to draft them to suit their own interests at the expense of consumers. </p>
<p>Similarly, we do not always know when a financial institution takes advantage of us, just as Wells Fargo customers did not always know that it had opened unauthorized accounts that lowered their credit scores. </p>
<p>Consumers need protection from misbehaving companies. If the bureau is eliminated, significantly weakened or starts protecting banks rather than consumers, all consumers will suffer.</p>
<p><em>This is an updated version of an article originally published on July 10, 2017.</em></p><img src="https://counter.theconversation.com/content/86379/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Along with three co-authors, Jeff Sovern received a $29,510 grant from the American Association for Justice Robert L. Habush Endowment and by a grant from the St. John’s University School of Law Hugh L. Carey Center for Dispute Resolution in 2014 to study arbitration. It resulted in an article. Along with Professor Kate Walton, he received a grant from the National Conference of Bankruptcy Judges Endowment for Education to study debt collection, resulting in another article. He is a member of the National Association of Consumer Advocates.
</span></em></p><p class="fine-print"><em><span>Ann L. Goldweber is affiliated with NACA as a member.
</span></em></p><p class="fine-print"><em><span>Gina M. Calabrese is affiliated with the National Association of Consumer Advocates, New Yorkers for Responsible Lending, and the Association of the Bar of the City of New York (former chair, Committee on the Civil Court).
</span></em></p>Republican efforts to kill a rule designed to make it easier for people to sue banks are a reminder of why it’s so important to have a government agency that protects consumers.Jeff Sovern, Professor of Law, St. John's UniversityAnn L. Goldweber, Professor of Clinical Education, St. John's UniversityGina M. Calabrese, Professor of Clinical Education, St. John's UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/803532017-07-11T01:05:35Z2017-07-11T01:05:35ZWhy we need to save the Consumer Financial Protection Bureau<p>Republicans in <a href="https://www.forbes.com/sites/jimhenry/2017/05/30/congressional-critics-gunning-for-consumer-financial-protection-bureau/#24b1e09167ab">Congress</a> and the <a href="https://consumerist.com/2017/03/20/white-house-wants-authority-to-fire-consumer-protection-chief/">White House</a> have been very blunt about their desire to gut the <a href="https://www.consumerfinance.gov">Consumer Financial Protection Bureau</a> (CFPB). </p>
<p>The agency was launched in 2011 in the aftermath of the financial crisis as part of the <a href="https://www.sec.gov/about/laws/wallstreetreform-cpa.pdf">Dodd-Frank Wall Street Reform and Consumer Protection Act</a>. The goal was to protect consumers from deceptive or misleading practices in the financial industry. </p>
<p>So what would you miss if the CFPB suddenly disappeared?</p>
<p>In short, a lot, including a <a href="http://thehill.com/policy/finance/341313-consumer-bureau-releases-rule-to-prevent-banks-credit-card-firms-from-blocking">just-issued rule</a> that would prevent financial companies from using arbitration clauses to prevent people from having their day in court. </p>
<p>We base this conclusion on the work the three of us have done in recent decades. One of us (Sovern) has been writing about consumer law for more than 30 years, while the other two direct a <a href="http://www.stjohns.edu/law/consumer-justice-elderly-litigation-clinic">legal clinic that represents elderly consumers</a>. We’ve seen the worst of what financial companies can do, and we’ve also witnessed how the CFPB has begun to reverse the tide. </p>
<h2>Life before CFPB</h2>
<p>If you are one of the more than 29 million consumers who have collectively <a href="https://www.consumerfinance.gov/">received nearly US$12 billion</a> back from misbehaving financial institutions because of the CFPB’s efforts, you already know its value. But even if you are not, you have probably benefited from the bureau’s existence.</p>
<p>Before Congress created the bureau, there was no federal agency that made consumer financial protection its sole mission. Rather, consumer protection was rolled into the missions of a bunch of different agencies. And, as we saw during the financial crisis, regulators often gave it a back seat.</p>
<p>Congress, for example, gave the Federal Reserve the <a href="https://www.federalreserve.gov/reportforms/formsreview/RegZ_20080730_ffr.pdf">power to bar unfair and deceptive mortgage lending</a> in 1994. Yet the central bank considered consumer protection a backwater and didn’t use that power until 2008 – too late to prevent the <a href="https://theconversation.com/us/topics/great-recession-13707">Great Recession</a>. Congress took it away two years later when it passed Dodd-Frank.</p>
<p>The Office of the Comptroller of the Currency (OCC) regulates banks but was so preoccupied with ensuring lenders were safe that it failed to protect consumers from their predatory subprime mortgages – so much so that it prevented states from doing so too. And the Federal Trade Commission, which is tasked with fighting deceptive business practices, lacked the power to prevent such <a href="https://www.federalreservehistory.org/essays/subprime_mortgage_crisis">dangerous lending</a>.</p>
<p>This meant consumer protection on financial matters fell through the cracks. </p>
<p><a href="https://theconversation.com/how-wells-fargo-encouraged-employees-to-commit-fraud-66615">Wells Fargo’s recent fraud scandal</a> is a case in point. In the early 2000s, Wells Fargo employees <a href="https://www08.wellsfargomedia.com/assets/pdf/about/investor-relations/presentations/2017/board-report.pdf">began opening fake accounts</a> in clients’ names without permission, leading in some cases to <a href="https://www.wsj.com/articles/wells-fargo-is-trying-to-fix-its-rogue-account-scandal-one-grueling-case-at-a-time-1482855852?mg=prod/accounts-wsj%20rt5y7u6">lower credit scores</a> and a variety of fees. The bank <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2961347">ultimately opened millions of fraudulent bank and credit card accounts</a> before the scheme came to an end last year. </p>
<p>But as early as 2010, before the CFPB was set up, regulators at the OCC were increasingly aware of what was happening at Wells Fargo thanks to hundreds of <a href="https://theconversation.com/why-companies-like-wells-fargo-ignore-their-whistleblowers-at-their-peril-67501">whistleblower complaints</a>. The OCC even confronted the bank yet failed to take any action despite many red flags, according to an <a href="https://www.occ.gov/publications/publications-by-type/other-publications-reports/pub-wells-fargo-supervision-lessons-learned-41917.pdf">internal audit</a>. </p>
<p>It wasn’t until the <a href="http://freepdfhosting.com/29677883a9.pdf">Los Angeles city attorney</a> and the <a href="https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-fines-wells-fargo-100-million-widespread-illegal-practice-secretly-opening-unauthorized-accounts/">CFPB became involved</a> years later that Wells Fargo took forceful action to stop the fraud. The regulators <a href="https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-fines-wells-fargo-100-million-widespread-illegal-practice-secretly-opening-unauthorized-accounts/">fined Wells Fargo a total of $185 million</a> and forced it to refund fees it had charged customers and hire an independent consultant to review its procedures. </p>
<p>More importantly, they sent a clear message to other financial institutions: Cheat consumers and you will face the consequences.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/177626/original/file-20170710-5939-45mbev.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/177626/original/file-20170710-5939-45mbev.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=440&fit=crop&dpr=1 600w, https://images.theconversation.com/files/177626/original/file-20170710-5939-45mbev.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=440&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/177626/original/file-20170710-5939-45mbev.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=440&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/177626/original/file-20170710-5939-45mbev.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=553&fit=crop&dpr=1 754w, https://images.theconversation.com/files/177626/original/file-20170710-5939-45mbev.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=553&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/177626/original/file-20170710-5939-45mbev.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=553&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Consumer Financial Protection Bureau Director Richard Cordray testifies on Capitol Hill in 2013.</span>
<span class="attribution"><span class="source">AP Photo/Manuel Balce Ceneta</span></span>
</figcaption>
</figure>
<h2>Protecting consumers</h2>
<p>Since its inception, the bureau has acted repeatedly to stop financial institutions from harming consumers. </p>
<p>It blocked debt collector attorneys from <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-takes-action-halt-illegal-debt-collection-practices-lawsuit-mill-and-debt-buyer/">suing consumers based on false information</a>. It discovered systemic problems with consumer credit reports and forced companies to <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-oversight-uncovers-and-corrects-credit-reporting-problems/">correct errors</a>. It compelled credit card companies to <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-subprime-credit-card-company-to-refund-2-7-million-for-charging-illegal-credit-card-fees/">refund illegal fees</a>. It protected borrowers from <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-sues-nations-largest-student-loan-company-navient-failing-borrowers-every-stage-repayment/">unlawful student loan servicing practices</a>. It <a href="https://www.consumerfinance.gov/about-us/blog/ally-to-repay-80-million-to-consumers-it-discriminated-against/">made lenders repay</a> consumers they discriminated against. It <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-recovers-more-than-1-million-for-servicemembers-veterans-and-their-families/">recovered money for veterans</a> who complained of abusive financial practices. </p>
<p>When the bureau began publishing <a href="https://www.consumerfinance.gov/data-research/consumer-complaints/">consumer complaints on its website</a>, companies that might previously have ignored negative feedback paid attention. Financial institutions have responded to complaints to the CFPB <a href="https://www.consumerfinance.gov/data-research/consumer-complaints/">more than 700,000 times</a>, often by providing a remedy to the consumers.</p>
<p>Besides protecting consumers, however, Congress had a second motive in creating the bureau: to help prevent the kind of mortgage lending that helped cause the Great Recession. </p>
<p>To that end, the bureau has adopted <a href="https://www.consumerfinance.gov/policy-compliance/rulemaking/final-rules/2013-integrated-mortgage-disclosure-rule-under-real-estate-settlement-procedures-act-regulation-x-and-truth-lending-act-regulation-z/">rules</a> that help consumers to understand their mortgages – something that often <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1531781">wasn’t possible</a> under the previously misleading mortgage disclosures. It also issued <a href="https://www.consumerfinance.gov/policy-compliance/rulemaking/final-rules/ability-repay-and-qualified-mortgage-standards-under-truth-lending-act-regulation-z/">regulations</a> to prevent consumers from taking out mortgages that they couldn’t repay. And after borrowers take out a mortgage, <a href="https://www.consumerfinance.gov/policy-compliance/rulemaking/final-rules/2013-real-estate-settlement-procedures-act-regulation-x-and-truth-lending-act-regulation-z-mortgage-servicing-final-rules/">CFPB servicing rules</a> establish the procedures servicers must follow when communicating with borrowers, correcting errors, providing information and dealing with loan modification requests.</p>
<p>Two of us have personal experience with one of the bureau’s new mortgage rules, which powerfully illustrates the value of the CFPB.</p>
<p>In 2014, Alice, a client of our law school clinic, was struggling to pay the mortgage on her home – which she had refinanced a few years earlier – after a stroke forced her into retirement. <a href="http://www.stjohns.edu/law/consumer-justice-elderly-litigation-clinic">Our clinic</a> helped her apply for a modification of her loan. </p>
<p>But within weeks, instead of acknowledging Alice’s application, the loan servicer summoned her to court to begin foreclosure proceedings in violation of <a href="https://www.law.cornell.edu/cfr/text/12/1024.41">CFPB servicing rules</a>. Fortunately, our clinic was able to rely on those rules in getting the foreclosure action dismissed. Alice got her loan modified and remains in her home. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/177630/original/file-20170710-5982-qs3jpp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/177630/original/file-20170710-5982-qs3jpp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=482&fit=crop&dpr=1 600w, https://images.theconversation.com/files/177630/original/file-20170710-5982-qs3jpp.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=482&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/177630/original/file-20170710-5982-qs3jpp.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=482&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/177630/original/file-20170710-5982-qs3jpp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=606&fit=crop&dpr=1 754w, https://images.theconversation.com/files/177630/original/file-20170710-5982-qs3jpp.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=606&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/177630/original/file-20170710-5982-qs3jpp.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=606&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Demonstrators tried to draw attention to the subprime mortgage crisis back in early 2008.</span>
<span class="attribution"><span class="source">AP Photo/Matt Rourke</span></span>
</figcaption>
</figure>
<h2>Protecting the vulnerable</h2>
<p>This reveals how the bureau is particularly important to protect vulnerable consumers, like the elderly, who are frequently targeted by fraudsters and predatory lenders because of their cognitive and other impairments and because they often have accumulated substantial assets. The CFPB is the only federal agency with an office <a href="https://www.consumerfinance.gov/educational-resources/resources-for-older-adults/">specifically dedicated</a> to protecting the financial well-being of older adults. </p>
<p>The bureau has brought cases against companies that attempted to take advantage of seniors by, for example, <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-and-new-york-department-of-financial-services-sue-pension-advance-companies-for-deceiving-consumers-about-loan-costs/">misrepresenting the interest rates</a> on pension advance loans or <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-takes-action-against-reverse-mortgage-companies-deceptive-advertising/">deceptive advertising</a>. In 2015 alone, consumer complaints to the CFPB brought relief to <a href="https://data.consumerfinance.gov/dataset/Consumer-Complaints/s6ew-h6mp">more than 600 older Americans just through debt collection problems</a>.</p>
<p>The bureau has also worked to prevent financial abuse of the elderly, estimated to cost seniors <a href="https://www.truelinkfinancial.com/research">as much as $36 billion annually</a>. The CFPB has educated <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-issues-advisory-and-report-for-financial-institutions-on-preventing-elder-financial-abuse/">financial institutions</a>, <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-helps-assisted-living-and-nursing-facilities-protect-seniors-from-financial-abuse/">nursing facilities</a> and <a href="https://www.consumerfinance.gov/about-us/newsroom/director-cordray-remarks-on-money-smart-for-older-adults/">others</a> about recognizing and stopping elder financial abuse and exploitation.</p>
<h2>Consumer protection in peril</h2>
<p>Given Alice’s ill health, the consequences for her might have been disastrous if she had been thrown out of her home. But now she – and all of us – face the loss of the CFPB’s aid. </p>
<p>The CFPB <a href="http://www.latimes.com/business/la-fi-cfpb-cordray-hearing-20170405-story.html">is under attack</a> from Republican members of Congress who <a href="https://banks.house.gov/media/press-releases/banks-votes-choice-act-roll-back-dodd-frank-law">believe more in bank protection</a> than consumer protection. Some members have <a href="http://pubcit.typepad.com/clpblog/2017/02/ratcliffecruz-bill-would-eliminate-the-cfpb.html">proposed eliminating the agency altogether</a>. </p>
<p>The House of Representatives <a href="https://financialservices.house.gov/choice/">has passed a bill</a> that would cripple the CFPB by, for example, taking away the power it used to fine Wells Fargo for opening illegal accounts and concealing <a href="https://www.consumerfinance.gov/data-research/consumer-complaints/">its complaint database</a> from public view. In other words, it would force the bureau to sit idly by as financial institutions <a href="http://www.newsweek.com/your-bank-lying-you-619814">lie to consumers</a>. </p>
<p>Nearly every American has or will have a loan or bank account, a prepaid card, credit card, a credit report or some combination of those, and so has dealings with a financial institution policed by the CFPB. But <a href="http://press.princeton.edu/titles/10267.html">few of us read the fine print</a> governing these things or <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2516432">can understand it when we do</a>. That gives the companies that write these agreements the ability to draft them to suit their own interests at the expense of consumers. </p>
<p>Similarly, we do not always know when a financial institution takes advantage of us, just as Wells Fargo customers did not always know that it had opened unauthorized accounts that lowered their credit scores. </p>
<p>Consumers need protection from misbehaving companies. If the bureau is eliminated or significantly weakened, all consumers will suffer.</p><img src="https://counter.theconversation.com/content/80353/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Along with three co-authors, Jeff Sovern received a $29,510 grant from the American Association for Justice Robert L. Habush Endowment and by a grant from the St. John’s University School of Law Hugh L. Carey Center for Dispute Resolution in 2014 to study arbitration. It resulted in an article. Along with Professor Kate Walton, he received a grant from the National Conference of Bankruptcy Judges Endowment for Education to study debt collection, resulting in another article. He is a member of the National Association of Consumer Advocates. </span></em></p><p class="fine-print"><em><span>Ann L. Goldweber is affiliated with NACA as a member.</span></em></p><p class="fine-print"><em><span>Gina M. Calabrese is affiliated with the National Association of Consumer Advocates, New Yorkers for Responsible Lending, and the Association of the Bar of the City of New York (Chair, Committee on the Civil Court).</span></em></p>Republicans are hoping to eliminate or at least defang the only federal agency tasked solely with protecting consumers from financial abuses. What would we miss if they succeed?Jeff Sovern, Professor of Law, St. John's UniversityAnn L. Goldweber, Professor of Clinical Education, St. John's UniversityGina M. Calabrese, Professor of Clinical Education, St. John's UniversityLicensed as Creative Commons – attribution, no derivatives.