When the Dodd-Frank Wall Street Reform and Consumer Protection Act was passed in 2010, it was a sign that our government was taking tangible steps to protect Americans against the predatory acts that contributed to the worst financial crisis since the great depression. The Consumer Financial Protection Bureau (CFPB) was created to focus on one goal: protecting American consumers in the market for consumer financial products and services.
With a laser-focus and unprecedented authority, the CFPB quickly went about its mission. It recovered billions of dollars to victims of consumer fraud and deceptive practices, set new standards in the mortgage market, and reined in lenders from offering loans that the borrower could not reasonably repay. In short, the CFPB drew a line in the sand and made sure there was hell to pay for any financial organization that crossed it.
Today the CFPB exists as a neutered shadow of its former self, slowly starved and strangled while the country was distracted by tweets and temper tantrums.
Beginning with the appointment of Mick Mulvaney as acting director in November 2017, the CFPB started to wither away as the cancer within the agency metastasized. Over 100 officials left the CFPB in an exodus that shrank the workforce, publicly announced enforcement actions dropped an average of 75 percent, and Mulvaney announced a more pro-business “collaborative” approach to dealing with companies.
News about the CFPB holding companies’ feet to the fire have been replaced with stories that the financial industry is pleased with the changes that have been made. Policies have been instituted to dam the flow of future regulatory action. Existing rules, particularly in the payday loan industry, are being watered down to make things easier on the lenders.
Nowhere is the safety and welfare of consumers mentioned.
This trend will no doubt continue, as the senate voted 50-49 to appoint Mulvaney’s successor Kathy Kraninger to a five-year term in early December. Kraninger has never worked in consumer affairs, never worked in financial services, never worked as a financial regulator, and has never run a government agency. She has also gone on the record that she cannot identify any actions taken by Mulvaney during his time as acting director that she disagrees with.
We know that “this too shall pass,” and there’s a good chance that the CFPB will right itself under a future administration that is more compassionate to consumers. Still, it’s hard to read news stories about emboldened predatory lenders, massive data breaches, and rampant consumer fraud and know that very little – if anything – will be done about it.
After all, that’s what got us into the last financial crisis in the first place.
Wexler Wallace provides consumer protection services and is a national leader in prosecuting consumer protection claims on behalf of clients in state and federal courts throughout the country.
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