There’s a lot important stuff going down that our leaders need to deal with — immigration, climate change, Russians running amok. So what are Republican lawmakers doing? They’re busy with legislation aimed at stripping Americans of consumer protections.
About a half-dozen bills take aim at various aspects of the Dodd-Frank financial reform law and the Consumer Financial Protection Bureau it created.
Republicans are serving notice that their priority is making businesses happy at the expense of consumers who, if the bills become law, once again will be largely on their own in dealing with questionable or unfair corporate practices.
“The very same lawmakers who fought creation of the CFPB are now hoping to take both the bark and bite out of this critical consumer watchdog,” said Laura MacCleery, vice president of policy and mobilization for Consumer Reports.
“These bills would cripple the CFPB’s ability to stand up to the big banks and predatory lenders and leave consumers vulnerable to financial scams and rip-offs,” she said.
One bill, introduced last week by Sen. David Perdue (R-Ga.), would give Congress control over the protection group’s budget. The agency’s funding, like that of other federal financial watchdogs, was deliberately designed to be independent of lawmakers so that it couldn’t be influenced by financial-industry lobbyists.
Perdue’s bill follows legislation last month from Sen. Deb Fischer (R-Neb.) that would replace the bureau’s single independent director with a more politically motivated five-member commission. (The U.S. Appeals Court in Washington said last week it would revisit an earlier ruling declaring the agency’s structure unconstitutional.)
Rep. Jeb Hensarling (R-Texas), chairman of the House Financial Services Committee, is preparing a bill that would cripple the bureau’s authority to bring cases against financial institutions and eliminate databases of consumer complaints.
But my favorite Republican salvo came last week from Sen. Ted Cruz and Rep. John Ratcliffe, both of Texas. They introduced companion bills in their respective chambers of Congress that would simply do away with the Consumer Financial Protection Bureau — wipe it right off the face of the Earth.
Their bill, sweeping in scope, devastating to consumers, consists of only a single sentence: “The Consumer Financial Protection Act of 2010 is hereby repealed and the provisions of law amended or repealed by such act are restored or revived as if such act had not been enacted.”
Kind of like the ninth season of “Dallas,” which turned out to be just a bad dream.
Cruz’s office didn’t respond to my interview requests, but he said in a statement that the protection bureau is a rogue regulator “without any accountability to Congress and the people.”
He said his and Ratcliffe’s bills would “free consumers and small businesses from the CFPB’s regulatory blockades and financial activism.”
Let’s just say Cruz doesn’t know what he’s talking about, rather than suggest he’s deliberately trying to mislead people.
The fact is that the bureau has succeeded wildly at its mission of safeguarding consumers from illegal or dubious business practices. So far, it has recovered about $12 billion and imposed some much-needed accountability on lenders and other financial firms.
Just this month, the agency ordered MasterCard and Russell Simmons’ prepaid card company, UniRush, to repay $10 million to thousands of customers who were unable to access funds because of a service disruption last year. The two companies also were fined an additional $3 million.
Ratcliffe said in a statement that, rather than riding to the aid of beleaguered consumers, the bureau has “ended up hurting many of the very folks it was intended to help.”
I asked his office to elaborate. I received a statement from Ratcliffe citing the group’s “qualified mortgage rule,” which he said “has made it harder for young people and retirees on fixed incomes to be able to purchase a home.”
He also cited “rules on prepaid cards and short-term lending products” — i.e., payday loans — and the agency’s “decision to expand class-action litigation in place of arbitration in consumer finance disputes.”
These are completely bogus complaints.
The qualified mortgage rule, also known as the ability-to-repay rule, requires that lenders do their homework to make sure a loan applicant can make regular payments. The idea is to avoid a repeat of the mortgage mess, in which banks handed money to pretty much anyone with a pulse and then passed off the crappy loans to unwary investors.
And the housing market is doing just fine, thanks. Mortgage applications for new homes were up 9.2% last month from a year before, according to the Mortgage Bankers Assn. Last year saw the largest number of existing homes sold — 5.45 million — since 2006, according to the National Assn. of Realtors.
The bureau’s “know before you owe” rule for prepaid cards requires that card issuers clearly disclose all fees and refund any fraudulent transactions topping $50. Its proposed rule for payday loans would require lenders to check if borrowers are creditworthy and make it harder for people to be trapped in endless cycles of debt.
The proposed rule for dispute settlement would block financial firms from using mandatory arbitration as a way to avoid class-action lawsuits. Arbitration still could be required for individual disputes, but litigation would be an option for complaints involving numerous consumers.
A 2007 study by Public Citizen found that over a four-year period, arbitrators ruled in favor of banks and credit card companies 94% of the time in disputes with California consumers. A 2015 Consumer Financial Protection Bureau study concluded that “class actions provide a more effective means for consumers to challenge problematic practices by these companies.”
Rep. Maxine Waters (D-Los Angeles) said in a statement that Republican lawmakers have declared war on consumer protection.
“This is all part of President Trump’s Wall Street First agenda, which would clear the way for unscrupulous companies to once again prey on hardworking Americans across the country,” she said.
With everything going on in the world, that’s a pretty lousy priority.
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