Posts Tagged ‘CFPB’

April12

Barofsky, Born and Miller’s bombshells (video and notable quotes on “too big to fail”)

By: Rick Claypool

“Too big to fail” banks not only leave the country at risk of another crippling financial crisis, but also are holding the country’s political processes hostage because of the outsized power they wield.

That was the consensus among speakers at the release of Reality Check, a book by Public Citizen’s Taylor Lincoln that seeks to remind the public that deregulation caused the economic downturn and to counter the myths that have been propagated about regulations in recent years.

Watch the video (also embedded above) featuring highlights of the discussion.

Speakers included Neil Barofsky, the former inspector general of the Troubled Asset Relief Program, former Commodity Futures Trading Commission (CFTC) Chairperson Brooksley Born, and former Rep. Brad Miller (D-N.C.).

These three former public officials are among the best equipped to evaluate risks to the economy from insufficient regulation. Barofsky went toe-to-toe with the other financial regulators in pursuit of standards to prevent fraud and steps to ensure that loan restructuring programs perform their stated purpose of helping people avoid foreclosure rather than softening the blow to the banks’ balance sheets. Born warned about the risks of financial derivatives in the 1990s, a decade before they nearly brought down the financial system. Miller sought to police subprime lending abuses long before they were widely recognized and was an outspoken champion of the creation of the Consumer Financial Protection Bureau in the 2010 Dodd-Frank Wall Street reform bill.

The panelists’ discussion about the influence of too-big-to-fail banks and the force that industry wields through its ability to offer future employment to agency and congressional staffers was packed with eye-opening – and often appalling – observations.

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Posted in: Congress, Congress Watch Column, Consumer Protection, Financial Reform, Regulation0 comments

April9

Consumer financial watchdog must crack down on lenders that prey on students

By: Micah Hauptman

Photo of Public Citizen financial policy council Micah HauptmanWhen the Consumer Financial Protection Bureau (CFPB) wanted to hear from the public about private student loan affordability, Public Citizen’s members and supporters responded in full force!

More than 18,000 Public Citizen activists sent comments, decrying Wall Street’s over-financialization of our educational system and calling out the corporate predators that have trapped students in cycles of debt to reap millions of dollars in ill-gotten gains. Many commented specifically on forced arbitration clauses and class-action bans that lenders stick into the fine-print language of student loan contracts, which prevent borrowers from going to court to hold their lenders accountable for predatory lending and other harmful industry practices.

Here are just a few of the public comments our members and supporters sent to the CFPB:

  • “I am permanently burdened, I can never stop working. I feel enslaved.”—a 71 year old woman who borrowed $40,000 in the early nineties to fund her master’s education. Since taking out her loans, the loan amount ballooned to $140,000. Now, a portion of her pay is garnished.
  • “In my 50 years as a lawyer, judge, and alternative dispute resolution provider, I am convinced that compulsory arbitration … is too often fundamentally unfair… A class action suit empowers the powerless which is precisely why the lenders want to jam arbitration and class action waivers down student throats.”

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Posted in: Activism, Consumer Protection, Financial Reform, Regulation0 comments

July17

Congress seeks to reward bad practices with immunity

By: Christine Hines

An effort by some congressional lawmakers to let mortgage lenders off the hook for violating rules and offering shoddy mortgages to consumers is an irresponsible appeal that could upend much-needed mortgage reforms before they even take effect."Christine Hines"

Led by U.S. Rep. Shelley Capito, (R-W.Va.), 108 lawmakers sent a letter to Consumer Financial Protection Bureau (CFPB) Director Richard Cordray, arguing for legal immunity for mortgage lenders. The lawmakers were commenting on a proposed rule for determining borrowers’ “ability-to-repay” and the definition of a qualified mortgage, required under the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act.

The proposed rule leaves open the question of legal liability for bad practices. The bureau must decide whether to allow mortgage lenders to be completely shielded from lawsuits, i.e. give them a “safe harbor,” or whether to protect them with a standard that presumes their compliance with the rules, but gives vulnerable borrowers the opportunity to provide evidence of the lenders’ wrongdoing.

Talk about short memories.

It was just five years ago that the U.S. economy imploded partly because toxic mortgages were given to mostly unaware borrowers. Mortgage lenders were able to hide their untenable risk-taking from the public and government oversight until it was too late. This irresponsible behavior led to the shutdown of large financial institutions, record home foreclosures and high unemployment. Now, unbelievably, lobbyists have convinced some lawmakers that bankers should be shielded from lawsuits, returning us to that place where perilous actions would remain in the dark and borrowers would be barred from seeking redress in court for their lenders’ wrongdoing.

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Posted in: Activism, Congress, Litigation, Product Safety, Social Justice, Uncategorized0 comments

July10

“Delay is the deadliest form of denial”

By: Christine Hines

The  (Consumer Financial Protection) Bureau (CFPB) shall conduct a study of, and shall provide a report to Congress concerning, the use of agreements providing for arbitration of any future dispute between covered persons and consumers in connection with the offering or providing of consumer financial products or services.” – Dodd-Frank Act, Section 1028(a)."Christine Hines"

“Delay is the deadliest form of denial,” said historian C. Northcote Parkinson. Unfortunately, this appears to be the path that some in the financial services industry want to follow – to distract and delay the CFPB’s decision-making and action on forced arbitration.

Last month, the Bureau received comments from the public on the Bureau’s study of predispute binding (a.k.a forced) arbitration. Many corporations insert an arbitration clause in their terms of service to block consumers from holding them accountable in court. If consumers are hurt or ripped off, they must take their claims to private, secretive tribunals that favor the companies.

Under the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act, the Bureau is required to study arbitration clauses that companies insert in contracts for consumer financial products and services, steering disputes with consumers into private arbitration proceedings instead of open court. After the Bureau completes its study, it may use its authority to limit or ban the practice.

Numerous public interest organizations submitted comments to the Bureau’s request for information on the study, see here, for example. The groups mostly asked for a thorough review of the issues relating to arbitration, including its impact on consumers and their ability, or lack thereof, to seek justice when they, individually or as a group, are financially injured by corporate wrongdoing.

As expected, the submissions from the financial industry were quite different. The re-occurring theme emerging from many of the industry submissions: distract and delay.

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Posted in: Consumer Protection1 comments

June19

CFPB Public Credit Card Complaint Database Constitutes Modest Advance

By: Bartlett Naylor

"Bart Naylor" "Financial policy"Today, the Consumer Financial Protection Bureau (CFPB) launched a public Consumer Complaint Database on credit cards. The CFPB also released a snapshot of the complaints it has received on credit cards, mortgages, private student loans and bank products through June 1, including six stories of success.

Some relief for credit card consumers arrived today in the shape of a new public database created by the Consumer Financial Protection Bureau, a critical new agency created by Wall Street reform.

With this new database, consumers will be able to identify repeated problems with specific banks, including those that resulted in monetary relief. Consumers also will be able to discern the volume of complaints in certain basic categories. That can help consumers make informed choices.

We ask the agency to improve the database by adding more granular detail about actual abuse. The issues listed are generic, such as “billing dispute” or “late fee.” The public deserves detailed narratives that can guide other consumers in making sound financial decisions. Ideally, the CFPB will enhance the database to better empower consumers to help one another and steer the market to more general reform.

Industry concerns about reputational risks should be ignored. Disclosure has long proven a reliable disinfectant of market abuse.

Bartlett Naylor is financial policy advocate with Public Citizen’s Congress Watch Division.

Posted in: Consumer Protection, Financial Reform0 comments

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