Column: 2017 marked a year of tearing down consumer protections ‘brick by brick’
If you think the government has no business telling business its business, this has been a pretty great year.
If, on the other hand, you think government has a role to play in ensuring fair play by companies that have shown themselves to be guided almost exclusively by self-interest and a disregard for consumers and public welfare, this year has been nothing short of horrendous.
And 2018 doesn’t look much better.
The Trump administration has been single-mindedly focused on getting rid of rules and regulations that businesses say hindered competition, innovation and free markets.
“The consumer protections that were put in place over the past two generations are being destroyed brick by brick under the Trump administration,” said Sally Greenberg, executive director of the National Consumers League.
That might sound like hyperbole, but it was a sentiment echoed by every consumer advocate I spoke with.
“This has been the most anti-regulatory and deregulatory administration in American history,” declared Robert Weissman, president of Public Citizen.
He told me “there is zero evidence” for the business community’s insistence that fewer rules translates to more jobs and a more vibrant economy.
“On the other hand, there is ample evidence for the benefits of regulation,” Weissman said. “Society is far, far better off, in economic terms, when there are rules on the books and constraints on corporate wrongdoing.”
The Brookings Institution has maintained a running list of noteworthy changes in the regulatory landscape under President Trump. The “curated selection” reached roughly 80 prominent rule changes by year’s end.
This represents a mere drop in the deregulation bucket. In July, the White House Office of Management and Budget said it was eliminating or freezing 860 pending regulations, many involving consumer and worker safeguards and environmental protection.
Emissions standards for the fossil-fuels industry? They’re now looser. Workplace safety? Trump has eased restrictions on exposure to hazardous chemicals and substances. He even wants to eliminate the federal agency that ensures safe drinking water in rural communities.
This month, Trump told supporters that he has “done more on knocking out regulations than any other president in our history.”
“And we haven’t even started,” he said.
Is this what the American people want? A recent poll found that more than 80% of Americans favored net neutrality, the rule put in place by the Obama administration in 2015 that required internet service providers to treat all content equally.
Two weeks ago, the Republican-controlled Federal Communications Commission repealed it, much to the delight of deep-pocketed telecom companies.
This isn’t to say all regulations are good ones. But Trump’s rule-cutting appears motivated not by a desire to clean house but by a laser-like focus on padding the pockets of business.
For consumers, perhaps no action by Trump is more reflective of this business-first mentality than his decision to install his budget director, Mick Mulvaney, as interim director of the Consumer Financial Protection Bureau. The job became vacant after the former agency head, Richard Cordray, stepped down in November.
Mulvaney is yet another Trump appointee at war with the office he runs. Just as Energy Secretary Rick Perry once called for closing down the Energy Department, Mulvaney has said the CFPB is “a sick, sad joke.”
Business groups have been lobbying for years to do away with the agency, which is charged with protecting consumers from unfair or illegal financial practices, such as, oh, I don’t know, a major bank opening up millions of accounts without customers’ permission (“What is Wells Fargo, Alex”).
Critics conveniently ignore the reason the CFPB was created in the first place — to address the reckless corporate behavior that caused the near-collapse of the financial-services industry and led to the worst recession in U.S. history.
Mulvaney wasted no time bringing the bureau’s operations to a halt, issuing a monthlong moratorium on new regulatory actions and hiring. “Anything in the pipeline stops for at least 30 days,” he said.
Trump tweeted that the agency “has been a total disaster” that has left financial firms “devastated and unable to properly serve the public.”
In reality, the CFPB has returned about $12 billion to consumers by stepping in after banks and others behaved in abusive fashion. Moreover, U.S. banks posted record profits in 2016 and are on track for even more lucrative results.
All industries should be so devastated.
“The CFPB tramples on the fundamental economic rights of American citizens, taking away their choices and opportunities,” said Rep. Jeb Hensarling, a Texas Republican who chairs the House Financial Services Committee and has been one of the bureau’s harshest critics.
Here’s an example of the bureau trampling on your economic rights: In 2012, the CFPB opened an investigation, as required by federal law, into how mandatory arbitration provisions in financial contracts affect consumers. It held public hearings nationwide, and in 2015 issued a more than 700-page report on its findings.
In July, the bureau unveiled its rule, saying that arbitration clauses in banks’ and credit card companies’ contracts could continue, but financial firms couldn’t prevent customers from joining class-action lawsuits.
Within two weeks, at the prodding of those same financial firms, the Republican-controlled House voted to repeal the measure. The Senate followed suit in October.
The upshot is that even though the CFPB determined that class actions “provide a more effective means for consumers to challenge problematic practices” by banks and other financial companies, those firms can continue forcing customers to arbitrate rather than sue.
And why would they do that? Here’s a clue: A 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.
“It’s fair to say that the Trump administration has signaled that the bureau’s days as an aggressive monitor are over for now,” said Aaron Klein, policy director for the Brookings Institution’s Center on Regulation and Markets.
After Trump put Mulvaney in the CFPB driver’s seat — a move that’s being challenged in court — Hensarling issued a statement saying Mulvaney will protect consumers “from government interference with competitive, innovative markets.”
In other words, you’ll be safe from the government telling business its business.
Happy New Year.