The Star-Ledger

Don't Let Consumer Watchdog Be Defanged

The Star-Ledger — February 14, 2017

By Phyllis Salowe-Kaye
Guest Columnist

The Tramp administration apparently plans to turn over financial regulation to Wall Street, paving the way for "the big boys" to steal from their customers and destabilize the economy.

By signing an executive order to dismantle Dodd-Frank, the law that provides safeguards to prevent another financial crisis, President Donald Trump has broken yet another promise to the American people. During the campaign, he said, "I'm not going to let Wall Street get away with murder." But now he is going to gut the very rales that prevent that from happening.

The Consumer Financial Protection Bureau, or CFPB, was created from Dodd-Frank to bring basic standards of fair play to a place where they had been sorely lacking: the world of mortgages, checking accounts, credit cards, credit bureaus, student loans, consumer loans and debt collection. Since it got up and running less than six years ago, the CFPB has gotten off to a remarkable start. Among other things:

> It has crafted new mortgage-lending rales that ban hidden fees.

> It ended the sale of fraudulent add-on products by credit-card companies (returning more than $1.5 billion to consumers).

> It shut down scams that target military families and seniors.

> And it used its enforcement authority against illegal practices ranging from abuse by debt collectors, check cashers and bogus "credit repair" services to widespread wrongdoing by some of the country's biggest banks.

According to Americans for Financial Reform, a Washington-based nonpartisan coalition of more than 200 civil rights, consumer, labor, business, investor, faith-based, civic and community groups, "The bureau has delivered almost $12 billion in financial relief to more than 29 million Americans cheated by financial companies."

In short, this is an agency that has been fulfilling its mission, without letting itself be cowed by Wall Street or captured by revolving-door insiders.

That's why it's under attack, and why it urgently needs to be defended.

The attacks are coming from the big Wall Street banks, the payday lenders, the abusive debt collectors and their well-oiled friends in Congress. These forces opposed the bureau's creation in the first place, and since then they have thrown their weight behind a seemingly endless series of bills, amendments and sneaky budget ploys designed to undermine the CFPB's effectiveness. In recent days, they have been whispering in the new president's ear: "Fire the director."

Doing so would be terrible for American families, and for our economy. And it would be unlawful.

Under the leadership of Richard Cordray, the bureau has helped consumers while being deliberate, fair and open-minded. Cordray himself has been widely praised. Some bankers have even acknowledged his readiness to take their views into account. But because Cordray has demonstrated an ability — unfortunately rare among regulators — to stand up to the power of the lobbyists, he and the bureau have become targets.

Those who advocate his dismissal see that as a way to derail a number of important ongoing projects. The bureau is currently drafting rules against unaffordable 300 percent-plus interest-rate payday and car-title loans that trap people in a cycle of debt. It is also working to stop forced arbitration clauses that operate as a get-out-of-jail-free card for big banks that break the law. Rules against debt-collection abuses and overdraft scams are also in the pipeline.

But Cordray's term runs until July 2018, and by long-established legal precedent, he cannot be lawfully fired except for grave wrongdoing, for which there is no case.

As a candidate, Trump campaigned against Wall Street and a rigged system. Any attempt to defang the CFPB will be seen for what it is: a cave-in to the power of Wall Street and the financial lobby. Hollowing out the CFPB would be terrible for American consumers and families.

That movie has a bad ending. We really don't need to see it again. Call U.S. Reps. Josh Gottheimer (D-5th Dist.) and Tom MacArthur (R-3rd Dist.), who sit on House Banking and Financial Services Committee, and tell them not to gut the law that protects us from financial meltdown.

Phyllis Salowe-Kaye is executive director New Jersey Citizen Action, a statewide organization focusing on social and economic justice.

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