People hailed the new consumer watchdog group that was born out of the Dodd Frank Act. With each new accomplishment (and let’s face it, this is one government agency that, for once, has consumers front and center), the group emerged with a stronger position in both the government and financial sectors. It’s brought long overdue and necessary changes – and it’s given Americans a powerful voice. It could even be said that this is President Obama’s crowning glory during his presidency – at least, up until now. Of course, we don’t know what November brings, but now, as if there wasn’t enough uncertainty with this election, the fate of this consumer advocacy group could be at stake.
No Love Lost
The concern is if Romney is elected, he will soon nix CFPB and it’s not a very far fetched notion. Romney has been consistent in his statements about Dodd Frank and his belief it needs to be either overturned or completely revamped. And Republicans as a whole are vehemently opposed to the Consumer Financial Protection Bureau, too. Indeed, it could be the first order of business for a Romney – Ryan presidency.
The bureau was created so that credit card offers, mortgages, student loans and eventually even payday loans offer fair products and services to the American consumer. But it’s more than that; the bureau provides sources so that consumers can arm and educate themselves. It also oversees and when applicable, it also enforces federal consumer financial laws. Indeed, it’s a powerful force in the banking sector and one that folks like Jamie Dimon do not support. It should be noted its funding comes exclusively through the Federal Reserve; that said, it is absolutely independent from the central bank.
It’s wasted no time in its demands for a number of financial entities to clean house; it’s ordered credit card companies to reimburse and pay hundreds of millions of dollars in consumer monies, it’s investigating everything from student loan processes to the controversial payday loan companies.
A Romney White House
Now, though, a Romney White House, along with Republican House and Senate all but guarantees the elimination of these new consumer safety mechanisms. That said, if it’s another four years for the Obama administration, not only will CFPB remain in place, but it will likely become an even more formidable force.
Bill Bartmann, who is the co-founder of CFS II, a debt collection agency, said,
If Romney wins and the Republicans keep the House and take the Senate, they likely would neuter the CFPB.
That Paul Ryan
Here’s where it gets interesting: Paul Ryan (yes, that Paul Ryan) led a charge last winter to annihilate the CFPB’s 2013 budget. He wanted to cut the funding in half. When that didn’t happen, a new proposal was introduced and this time, the Republicans wanted to repeat the Dodd Frank Act in its entirety, including CFPB. Remember, president-hopeful Mitt Romney has already said one of his first priorities if elected would be to eliminate Dodd Frank while holding on to its stronger clauses for inclusion into a new law. He’s looking for “modern regulatory framework”, which is exactly what the big bankers are hoping will happen.
I very much believe in updated regulation, but I believe Dodd-Frank has gone beyond what was appropriate,
he said at a recent public fundraising event.
What is making so many nervous is that in May, a spokesperson for the Romney camp specifically addressed the CFPB and said Romney would “propose to disband the consumer watchdog and place its supervisory powers to another government agency”.
The question is, why would Romney want to disband the one government agency that actually serves a purpose? Millions of consumers are benefiting from this agency’s changes and 80% of Americans support the CFPB. It’s also resulted in better transparency in credit card disclosures, companies and other lenders. Romney has even gone so far as to say he’d like to see Congress oversee a new CFPB. That’s interesting considering the Congress has yet to address the many problems in this country, including the fiscal cliff.
If Dodd Frank is overturned, the CFPB goes down with it and once again, those regulatory shortcomings will rein supreme.
We’ve done that and seen that, and it didn’t work out that well,
said Ruth Susswein, deputy director of national priorities at consumer-advocate group Consumer Action.
It’s basically allowing self-regulation again. And that has failed.
Finally, there are those who feel as though one of the agency’s goals of ensuring we never have “too big to fail” banks again is making itself too big to fail. Testifying before Congress, one law professor said the agency has become massive and that will surely eliminate access to credit while also increasing the costs of having credit. The truth is CFPB has, in two years, investigated and filed against three of the big three credit card companies and at least two of those cases have resulted in refunds for credit card consumers.
- FDIC Investigating Banks Offering Payday Loans – June 20, 2012
- What Are Parent PLUS Loans? – November 21, 2012
- AMEX to Begin Issuing Secure Chip Cards – July 2, 2012
- FTC Warns of Prepaid Card Scams – May 23, 2013
- In an Election Year, CARD Act Crucial – August 2, 2012