Trump Acts To Make Predatory Finance Great Again

The following is part of an article by economist Paul Krugman:

Just over two years ago Wells Fargo agreed to pay $3.7 billion — $1.7 billion in penalties and $2 billion in damages — to the Consumer Financial Protection Bureau. . . .

This settlement followed earlier scandals at Wells Fargo, notably the “cross-selling scandal” in which, among other things, bank employees opened as many as 2 million accounts in customers’ names without their authorization. Altogether the bank has paid $6.2 billion in penalties since 2016.

Overall, according to Sen. Elizabeth Warren, who conceived of CFPB, the bureau “has returned over $21 billion to families cheated by Wall Street.”

But now the agency that won those settlements has been effectively abolished. On Monday Russell Vought, the architect of Project 2025, the new director of the Office of Management and Budget and now CFPB’s acting head, sent the email above to all of the agency’s staff telling them to stay away from the office and do no work. . . .

 By any reasonable standard, CFPB has been an outstanding success story.

Why, then, rush to shutter the agency? . . .

It seems fairly obvious. CFPB was created to protect Americans from financial predation, and has done a very good job of doing so. But now we have government of, by and for financial predators. Trump has famously left behind a trail of bankruptcies and unpaid contractors, and is furiously grifting even now. Musk has faced multiple lawsuits from vendors and former employees over unpaid debts.

And let’s not forget that crypto, which has gained a lot of influence with this administration, has yet to find a real-world use case other than money laundering.

So the best way to explain the sudden closure of the Consumer Financial Protection Bureau, as I see it, is as part of an effort to make predatory finance great again.

GOP Says It's OK For Big Banks To Screw Consumers

(Cartoon image is by Tony Auth in the Philadelphia Inquirer.)

During the Obama administration, the Democrats created the Consumer Financial Protection Bureau (CFPB). It's purpose was to protect consumers from Big Banks and other financial entities taking advantage of them -- and it's worked pretty well.

But the Republicans have taken millions of dollars from the financial industry, and this week they acted to chip another block off the CFPB wall to pay that industry for their political largesse. The GOP made it clear they are on the side of the giant financial institutions -- not consumers.

Here's how the latest GOP action is described by Ian Millhiser at Think Progress:

Tuesday night, as many Americans were preparing to go to bed, an evenly divided Senate voted to give broad lawsuit immunity to credit card companies, auto lenders, credit reporting companies like Equifax, and many other financial firms. The 50-50 tie in the Senate was broken by Vice President Mike Pence (R), and the House approved the lawsuit immunity measure. President Trump is expected to sign it.

The resolution passed by the Senate overrides a rule created by the Consumer Financial Protection Bureau (CFPB), which prevents many financial firms from engaging in two abusive practices. The rule prohibited much of the financial industry from using “forced arbitration” agreements — a common tactic where a company refuses to do business with consumers who will not sign away their right to sue the company in a real court.

Consumers who sign away their right to sue must resolve any disputes with the company in a privatized arbitration system that favors corporate parties.

Additionally, the CFPB rule prohibited credit card companies and many other financial firms from requiring consumers to sign away their right to bring class action lawsuits, a form of litigation that ensures that companies that charge certain illegal fees to consumers face a consequence for their actions.

The vote is a major victory for the banking industry. Every Senate Democrat voted to preserve the CFPB rule, as did Republican Sens. Lindsey Graham (R-SC) and John Kennedy (R-LA). All other Republicans voted to reverse the CFPB rule.

Tuesday evening’s vote also effectively strips the CFPB of much of its authority to rein in abusive arbitration clauses. Under the Congressional Review Act, CFPB cannot issue a rule “in substantially the same form” to one that is approved by Congress.

Trump/GOP Readying An Attack On The CFPB

The Republicans have never liked the Dodd-Frank Act (or the Consumer Financial Protection Bureau created by that act to protect consumers from abuses by the financial sector), and now that they have a Republican in the White House they are making plans to change the Act -- making it far more bank-friendly. Trump himself said last Monday that he planned to "do a big number on Dodd-Frank".

While Trump hasn't released his plans to attack Dodd-Frank, the GOP in Congress already has a bill. Rep. Jeb Hensarling (caricatured here by DonkeyHotey) is ready to introduce the CHOICE Act -- an odious bill that would remove many of the regulations imposed on the financial sector by Dodd-Frank. It would also de-fang the CFPB, making it much harder to hold the financial industry responsible for abusing consumers.

Here is part of an excellent article by Jared Bennett for the Economic Policy Institute. The part of the article I'm reposting concerns the CFPB, and how the CHOICE Act would change it.

The Choice Act also targets the Consumer Financial Protection Bureau, which Dodd-Frank established to protect consumers from “unfair, deceptive or abusive practices” of the financial sector, according to the law.

But Hensarling believes the agency is an example of government run amok, claiming the CFPB has “infringed on the economic freedoms of consumers.”

That sentiment, along with Trump’s election win, “will result in a sea change at the CFPB,” said Alan Kaplinsky, who leads the Consumer Financial Services Group at the law firm Ballard Spahr. “There’s a lot of discontent among the companies that are regulated and supervised and who have become the target of the CFPB.”

The most likely change would replace the CFPB’s individual director, appointed by the president and confirmed by the Senate, with a five-member commission that would have three Republicans during the Trump administration. The panel would be subject to congressional oversight and appropriations. Bank executives and their allies in Congress say the agency’s current director — former Ohio Attorney General Richard Cordray, a controversial Obama appointment initially made during a congressional recess and confirmed by the Senate only 18 months later — has too much power and is unaccountable to Congress.

CFPB crackdowns on practices the agency deems “abusive” have led some Republicans to charge that the agency is straying from enforcement into advocacy. When the CFPB announced new rules regarding the payday-loan industry, which has been charged with targeting low-income individuals with high-interest loans that can trap them in long-term debt, Hensarling fired back at Cordray.

“Accountable to no one, he alone decides for all Americans whether they can take out a small-dollar loan to meet emergency needs,” Hensarling said in a press release.

The proposed changes to the CFPB, which include repealing the CFPB’s authority to ban products and services that regulators deem abusive, are aimed at reducing what some Congress members believe are controversial actions, like the payday-lending rules.

But the agency still should enforce the law under a Republican-led CFPB, Kaplinsky said. “There are plenty of clear cut violations of law that [the CFPB] can target without taking extreme positions where the industry is caught off guard and surprised,” he said.

Sens. Mike Lee, R-Utah, and Ben Sasse, R-Neb., wrote a letter to Pence this month urging the administration to fire Cordray. Neugebauer, one of the sponsors of the Choice Act, is said to be Trump’s choice to head the agency.

Proponents of reform also say a five-person commission would allow for more industry input in CFPB decision making. Changing the CFPB’s funding source from the Federal Reserve to congressional appropriations also would make the agency more accountable by placing it under the supervision of elected officials in Congress.

Or, the change could inject politics into the agency, say CFPB supporters.

“What we know about commissions is they tend to be gridlocked,” said Yana Miles, policy counsel at the Center for Responsible Lending, a nonprofit research organization that advocates for fair lending practices.

A divided commission may prevent the agency from quickly responding to abusive practices by financial institutions, critics of the proposed structure argue.

“It wasn’t that long ago that we saw the waves of predatory lending that nearly destroyed our economy,” Miles said. The CFPB “is the one thing out there standing between consumers and the wild wild west of the days leading up to the crisis.”

CFPB critics, nevertheless, have the courts on their side, so far. A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit ruledlast year that the agency’s single-director structure is unconstitutional. The CFPB has asked the full D.C. Circuit to rehear the case.

Supporters say the CFPB is accountable to consumers, as illustrated by a record of punishing banks’ wrongdoing. Since opening its doors in 2010, CFPB actions have resulted in more than $11 billion in compensation or debt reduction to consumers. Among its major cases:

• One of its most high-profile decisions came last year, when the CFPB finedWells Fargo $100 million for opening accounts without customers’ consent, with another $35 million going to the Office of the Comptroller of the Currency and $50 million to the City and County of Los Angeles.
• The CFPB brought complaints in 2014 against Corinthian Colleges, a for-profit college accused of overselling the employability of its graduates, and ITT Educational Services, a for-profit institution accused of predatory student lending.
• On Jan. 18, the CFPB announced a lawsuit against Navient Corp., the nation’s largest student-loan servicer, for “systematically and illegally failing borrowers at every stage of repayment.”

The CFPB relied partly on its mandate to prevent abusive practices to pursue the Wells Fargo case, Miles said. Under changes in the Choice Act, “a Wells Fargo situation could pop up again and it would either not be addressed or would take a much longer time to get to it,” Miles said.

Changing the CFPB may not be so easy, despite Republicans’ control of Congress and a new White House occupant they see as an ally. Sen. Warren, who spearheaded the creation of the agency, warnedHensarling and his colleagues about the CFPB’s importance during a November conference of the Wall Street Journal’s CEO council, a group of influential business leaders.

“The Consumer Financial Protection Bureau is doing the people’s business. And it has its own fan club out there: It’s got the people it’s working for,” Warren said. “You try to take the legs out from underneath the Consumer Financial Protection Bureau — I think that’s not only a problem for Donald Trump and for the Republicans. I think this is something that the American people will say ‘enough.’”

Indeed, 56 percent of Trump voters want the CFPB either left alone (41 percent) or expanded (15 percent), according to a Morning Consult pollconducted in December. Likewise, 71 percent of Republican and Democratic voters said they supported the CFPB, according to a 2016 poll by Lake Research Partners.

Warren Blasts GOP/Big Banks For Trying To Destroy CFPB

Here is the latest missive from Senator Elizabeth Warren (D-Massachusetts):

Why are the giant banks still fighting to kill off the Consumer Financial Protection Bureau? 

Why have Republicans advanced a bill to take the legs out from under the CFPB?  

Why did one Republican presidential candidate after another – including Donald Trump – promise that if they were in charge, they would repeal the Dodd-Frank financial regulations, including the CFPB?

We got a hint a few days ago: Wells Fargo proved that giant banks still think the rules don’t apply to them. Nope. They think they can cheat their customers, stuff their pockets with money, and still walk away.

Over the past five years, Wells Fargo created more than 2 million checking and credit card accounts that weren’t authorized by its customers. Employees who had strict sales quotas to hit would secretly open and transfer money in and out of those fraudulent accounts, costing thousands of customers millions of dollars in fees.

The new Consumer Financial Protection Bureau went after this fraud with everything they’ve got. Late last week, the CFPB announced that Wells Fargo customers are getting all of their money back and Wells Fargo will pay a record-breaking $100 million fine to the agency.  

Make no mistake – this business with Wells Fargo isn’t over. How could the bank create more than 2 million fake accounts without senior executives knowing? How could the bank fire more than 5000 low-level employees for misconduct without stopping to wonder whether there was a problem with the firm’s incentives or culture? I think there are more questions for Wells Fargo to answer.

But the CFPB has done its job: spearheading an investigation, watching out for consumers, imposing a fine, and making the whole stinky mess public. And that’s why the big banks and their Republican friends want to leash up the CFPB – because this is a government agency that is working for the people.  

The consumer agency investigates giant frauds, but it also helps people one at a time. The CFPB complaint hotline has a website and a phone number you can use when you have a problem with your bank, credit card, mortgage company, or student loan servicer. So far, the hotline has processed nearly a million complaints, big and small. Not only does the CFPB work to get you a response on your complaint, but they also use the information to find those large, widespread cases of fraud and abuse. 

Incidents like Wells Fargo come to light the more people contact the CFPB about banks’ bad behavior, so if you have a complaint, submit it here (or bookmark this website).

The Wells Fargo case is one more reason we need to fight for a strong Consumer Financial Protection Bureau. The big banks and financial institutions hate the CFPB, and they have bills pending in the House and Senate to get rid of it. The Republican Party’s 2016 platform calls for the CFPB to be “abolished.” The only way to stop the right-wing attacks on the consumer agency is for all of us to fight back.

The CFPB is on our side – but we need to use it and to fight for it.

Thanks for being a part of this,

Elizabeth

Warren Responds To Wall Street Attacks On Her And CFPB

The financial moguls of Wall Street have recently funded some ads attacking Senator Elizabeth Warren and the Consumer Financial Protection Bureau (CFPB). Warren helped create the CFPB to protect American consumers from the financial shenanigans of Wall Street and the giant banks. Now she is eager to defend it from efforts by Wall Street to weaken or eliminate it.

Here is her reply to those attacks, and the effort to weaken the regulations:

When is the last time someone mentioned to you that they really wished banks could load more fine print on credit cards? When did someone say they hoped Wall Street would get another chance to blow up the mortgage market? When did you hear that customers were hoping for another chance to get cheated by a payday lender?  

Never?

So why is a right-wing group spending $500,000 to attack me and the Consumer Financial Protection Bureau? And why right now?  

Think about this: Before the end of the year, Congress must pass two pieces of legislation, a highway bill and a government funding bill. That’s like ringing the dinner bell for the Wall Street banks. The lobbyists are swarming this place.

Two bills are moving in Washington, and the big banks see a chance to weaken the CFPB and the Dodd-Frank oversight rules. Their plan is to quietly slip the rollbacks into the legislation that must pass, like the government funding bill. That way Wall Street gets what it wants, and their friends in Congress get lots of cover when they vote for it.

That’s what those crazy, Commie dictator attack ads are all about. Wall Street knows that if they can soften up support for the Consumer Financial Protection Bureau, the Republicans – and honestly, some Democrats – will feel a little safer voting to weaken the rules that protect consumers and hold big banks accountable. Since closed-door discussions are going on right now, this is the time.

If Republicans really think it’s time to talk about financial reform, then let's not do it through shady attack ads funded by secret, unnamed corporations. Let’s put it all out on the table. And let’s have everyone in Congress – Democrats and Republicans – declare publicly where they stand.  

I say: Bring It On.

If the financial industry wants to push rollbacks, then I want to make it easier to send bankers to jail when they launder money for drug cartels, or rig foreign exchange markers, or cheat pension funds out of desperately needed money. If the financial industry wants to chip away at the CFPB and financial oversight, then I want to have a serious, on-the-record conversation about breaking up the biggest banks.

Let’s put it to the American people: Are you ready to weaken the Consumer Financial Protection Bureau and Dodd-Frank, to give the biggest banks in the country more chances to take more risks and leave you holding the bag? Or is it time for a little more accountability – accountability for large financial institutions that month after month are in the headlines for breaking the law?

We need to vote on a highway bill. We need to vote on a government funding bill. And if there’s anyone in Congress – Republican or Democrat – who thinks they can slip goodies for Wall Street into these bills without a fight, they are very, very wrong.

Elizabeth

The CFPB Is A Huge Success Story For Democrats

Before the Dodd-Frank bill was passed early in the Obama administration, the Wall Street banks and other large financial institutions had an enormous advantage over consumers. Even in a case of obvious fraud or mismanagement, those financial giants could afford to send an army of lawyers against a consumer who dared to file suit against them. It was like David against Goliath -- only Goliath won almost every time in that financial battle.

But the Democrats had a warrior of their own -- Elizabeth Warren, who was a financial advisor in the Obama administration. She fought long and hard to include a provision in Dodd-Frank that would create a bureau that would act to protect consumers in their dealings with the financial giants -- and she was successful. That organization is now called the Consumer Financial Protection Bureau (CFPB).

The president had wanted to appoint Warren as the first head of the CFPB, but that was blocked by a Republican filibuster (at the behest of the Wall Street bankers). It turns out that blocking her appointment was a big favor to Democrats and to Warren -- because she then ran for Senate, and upset the Republican holding the Senate seat once belonging to Ted Kennedy. Now she is a strong voice for consumers in the United States Senate, and a thorn in the side of the Wall Street bullies.

But what about the CFPB -- the bureau she was instrumental in creating? Has it been effective? The answer is that it has been very successful. As of last July, the CFPB had recovered more than $4.6 billion for consumers ($98 million of it for members of our military, who are particularly susceptible to financial wrongdoing while serving overseas -- especially in a war zone). With the CFPB on their side, consumers have the power they needed to take on the giant financial institutions when they are mistreated or ripped-off.

The Consumer Financial Protection Bureau is a great success story for Obama, Warren, and the Democratic Party.

CFPB Gives Consumers A Way To Fight Back

One of the accomplishments of the Obama administration was the creation of the Consumer Financial Protection Bureau (CFPB). Before it was created, consumers were basically at the mercy of the giant financial institutions. And even if the banks were clearly in the wrong, their phalanx of attorneys could make any actions by a consumer (especially one with limited funds) cost prohibitive. In other words, the banks could do what they damn well pleased with impunity.

The CFPB has changed that, because it puts the power of the federal government behind justified consumer complaints -- and considering the number of complaints filed against financial institutions since 2012 (over 265,000), it is easy to see why the big financial institutions (and their GOP allies) fought so hard to keep the CFPB from being established. They now have to answer for playing fast and loose with the financial rules and regulations.

The complaints filed with the CFPB is a public record -- and the chart above shows the banks with the highest number of complaints against them. It looks like this program is a success.

Elizabeth Warren Celebrates The 3rd Anniversary of CFPB

Yesterday was the third anniversary of the date the Consumer Financial Protection Bureau (CFPB) became an independent agency, and began working to protect Americans from the shenanigans of Wall Street and the giant banks. One of the chief architects of that bureaus creation was Elizabeth Warren, and she was originally destined to be its first agency head.

But the Republicans decided they couldn't allow the president to have his first choice leading the agency -- so they blocked the nomination of Warren. It turned out to be a huge mistake for them, because she then ran for the Senate in Massachusetts and got elected. She is now a constant thorn in the side of Wall Street and the giant banks, and is in a good position to protect the CFPD from Republican attempts to destroy or weaken it.

 Yesterday, Senator Warren send the following e-mail to her supporters, celebrating the anniversary of the CFPB. I thought it was excellent, so I reprint it here in case you haven't seen it.

Not long ago, I was at a McDonald's when a man came over, held out his hand and said he had been having trouble with a fee his bank had charged. It wasn't huge, but he said the bank should not have charged him. He called and argued, talked with customer relations, asked to speak to a manager -- and he got a big, fat zero.

Then he said he remembered about the new Consumer Financial Protection Bureau and told the bank he would file a complaint. They put him on hold and then came back and said they would reverse the fee. The agency worked.

Today is the fourth anniversary of Dodd-Frank, the law that established the Consumer Financial Protection Bureau -- and the third anniversary of the date the CFPB became an independent agency. And in those three years, the agency has done a lot to help level the playing field.

• The CFPB has forced big financial companies to return more than $4 billion dollars to consumers they cheated.


• The CFPB has put in place rules to protect consumers from a whole host of dangerous financial products and to make sure that companies can't issue the kinds of deceptive mortgages that contributed to millions of foreclosures.


• The CFPB has helped tens of thousands of consumers resolve complaints against financial institutions that cheated them. 

Sure, there is a lot of financial reform work left undone. The big banks today are dramatically bigger than they were in 2008 and they are taking on new risks, and I think that means we need a 21st Century Glass-Steagall law to break them up. But I celebrate the progress we've had so far: When big banks have to listen to their customers a little more, the playing field starts to level out just a little bit more.    

The big banks spent more than a million dollars a day lobbying against financial reforms, and top lobbyists said that killing off the consumer agency was their number one priority.  Even now, the Republicans continue the attack, introducing bills that would take the legs out from under the agency.

We didn't have the lobbying muscle or the money that the big banks had. But we got that agency because we fought for it. We joined forces online and through groups, and we made our voices heard. And now, after three years, it's starting to work.

I smiled at the guy who said he got his money back. I smiled because I love to hear how the CFPB works. But mostly I smiled because it reminded me of what we can do when we fight.  

Happy anniversary!

Elizabeth

Warren Blasts GOP Over Obstruction

This lady is fast becoming one of my favorite senators. She wanted to become the head of the new Consumer Financial Protection Bureau (CFPB), so she could protect American consumers from being taken advantage of by the giant banks. The Republicans blocked that to protect the Wall Street moguls they worship. So she went back to Massachusetts and defeated Republican Senator Scott Brown. Now she's back in Washington in a much more powerful position -- and still determined to do what's best for American citizens.

And believe it or not, the Republicans are still blocking the appointment of anyone to be the head of the CFPB. This time it's Richard Cordray (who was nominated by President Obama after it became clear that Professor Warren could not be approved). It's been over a year now, and the GOP is treating Cordray just like they did Warren. They are blocking his nomination, and they say they will continue to block it until the CFPB is weakened by rewriting the law that created it. They are still trying to protect the giant banks instead of the citizens they were elected to protect.

But this time there's something different. Senator Elizabeth Warren is not only in the Senate, she's on the Senate Banking Committee (a nightmare for the Wall Street moguls). And that committee is the one where the Republicans are trying to hold up Cordray's nomination to head the CFPB. This week that committee is once again questioning Mr. Cordray for the umpteenth time -- and Senator Warren has had enough of it. When it was her turn, she didn't bother to question Cordray. Instead, she aimed her remarks at the Republican senators trying to weaken the CFPB protections by delaying Cordray's nomination. Here is some of what she had to say:

"I see nothing here but a filibuster threat against Director Cordray as an attempt to weaken the consumer agency. I think the delay in getting him confirmed is bad for consumers, it's bad for small banks, bad for credit unions, for anyone trying to offer an honest product in an honest market."

"The American people deserve a Congress that worries less about helping big banks, and more about helping regular people who have been cheated on mortgages, on credit cards, on student loans and on credit reports."

"What I want to know is why, since the 1800s, have there been agencies all over Washington with a single director, including the [Office of the Comptroller of the Currency], but unlike the consumer agency, no one in the U.S. Senate has held up confirmation of their directors demanding that the agency be redesigned."

"What I want to know, is why every banking regulator since the Civil War has been funded outside the appropriations process -- but unlike the consumer agency, no one in the U.S. Senate has held up confirmation of their directors demanding that that agency or those agencies be redesigned."

"And what I want to know is why there are agencies all over Washington whose rules are final subject to ordinary reviews and oversight, while the CFPB is the only agency in government subject to a veto by other agencies -- but unlike the CFPB, no one in the U.S. Senate holds up confirmation of their directors demanding that those agencies be redesigned."

Thank you Massachusetts, for sending this wonderful woman to Washington! Ted Kennedy would be very proud to have Elizabeth Warren holding the senate seat that he had held for many illustrious years.