When a government agency announces a task force to “modernize” laws, it’s not unreasonable to think they’re acting in the public’s interest — for instance, updating privacy laws to keep pace with technological advances.
So it should be reason for optimism that the Consumer Financial Protection Bureau says it’s forming a task force “to examine ways to harmonize and modernize federal consumer financial laws.”
That is, until you recall the various ways the CFPB has worked to undermine consumer financial laws since the business-friendly Trump administration took power.
Then you have to wonder: Which laws exactly does the CFPB see as needing harmonization and modernization? What doesn’t it like about them?
And perhaps the biggest question of all: Is the Dodd–Frank Wall Street Reform and Consumer Protection Act on the chopping block?
That’s the law that created the CFPB after reckless financial practices ushered in the worst economic downturn since the Great Depression.
Banks and other financial firms see Dodd-Frank as limiting their business opportunities and have called for its far-reaching provisions to be rolled back. President Trump has pledged to “dismantle” the law.
I asked a CFPB spokeswoman to detail which consumer laws are being targeted and, specifically, whether Dodd-Frank is in the crosshairs. She declined to comment.
Lauren Saunders, associate director of the National Consumer Law Center, said she views the task force as “a forum for proposals to weaken consumer protections.”
“I fear it will be stacked with people who have an agenda to deregulate,” she said.
That’s a reasonable fear in light of a report out this week from the watchdog group Allied Progress showing more than half the members appointed to a separate 12-person CFPB advisory board have ties to the financial services industry.
Kathy Kraninger, Trump’s appointee as director of the CFPB, said in a statement that “an objective and independent evaluation” of current regulations is necessary “to identify where there may be gaps or where regulation should be simplified or modernized.”
The bureau says its Taskforce on Federal Consumer Financial Law “will examine the existing legal and regulatory environment facing consumers and financial services providers,” and will recommend “ways to improve and strengthen consumer financial laws and regulations.”
Fair enough. It’s not as though existing laws and regulations can’t do with some improvement. Nearly all laws benefit from a little tweaking over time to reflect changes in society.
The thing about the CFPB under Trump is that it has gone out of its way to demonstrate an eagerness to loosen rules for the industries it oversees.
Among other recent moves, the bureau has declared its intent to make it easier for payday lenders to trap people in endless cycles of debt by easing rules requiring them to make sure loans can be repaid.
The bureau also is seeking to give expanded powers to debt collectors, including allowing them to contact people via text messages.
The CFPB says there’s historical precedence for its new task force. It says the panel was “inspired” by the National Commission on Consumer Finance, a nine-member advisory body created as part of the Consumer Credit Protection Act of 1968.
The commission’s report “led to significant legislative and regulatory developments in consumer finance,” the bureau says.
Presumably they didn’t think anyone would bother blowing the dust off a 47-year-old report to see what the commission actually came up with.
But that’s exactly what I did.
The National Commission on Consumer Finance made clear that the laws of the day were insufficient to protect people from greedy financial firms.
“Our report recommends significant additions to the protection of consumers in the fields of creditors’ remedies and collection practices,” it said. “We have urged restrictions on remedies such as garnishment, repossession and wage assignment.”
The commission urged an end to “harassing tactics in debt collections,” as well as “enhanced supervision and enforcement of the Federal Truth in Lending Act.”
“We also favored making federally chartered financial institutions subject to state as well as federal examination for compliance with state laws governing the terms and conditions of consumer credit extensions,” the commission said.
On the other hand, the commission backed a number of steps aimed at making financial markets more competitive, including a longer leash for the savings and loan industry. Within a decade, hundreds of S&Ls would be in financial peril because of skeevy lending practices.
I reached out to Ira M. Millstein, who served as chairman of the commission and is now a senior partner at the law firm Weil, Gotshal & Manges, focusing on government regulation and antitrust law.
I asked if the commission faced any pressure from business interests to come up with favorable (for them) recommendations.
Millstein, 92, didn’t deny that happened. But he said “it’s too long ago for me to sensibly answer your questions.”
Nobody thinks the National Commission on Consumer Finance was anything but a sincere, bipartisan effort to strengthen consumer financial markets. Its report served as a road map for improved regulations.
Which is why some consumer advocates are scratching their heads over the CFPB now claiming the commission as its inspiration for another run at revising consumer finance laws.
“I’d be shocked if the new task force is intended to improve consumer protections as the bipartisan task force they base it on was,” said Ed Mierzwinski, senior director of the federal consumer program for the U.S. Public Interest Research Group.
“There’s nothing inherently wrong with having a task force that does some deep thinking,” said Chris Peterson, director of financial services for the Consumer Federation of America. “It all depends on what the task force does.”
He said he’s worried the CFPB “will use it as fodder to justify slowing down enforcement cases and tearing down regulations.”
The CFPB’s Kraninger said that “as we work to set up the task force, we encourage interested individuals to apply to be considered to be part of the task force.”
Peterson said he’s thinking about doing just that. He doubts he’d be accepted. He just likes the idea of trying to influence the bureau from within.
Heck, maybe we should all give it a go.
Email what you’d aim to accomplish as a task force member to CFPB_Taskforce@cfpb.gov. You have until Friday, Oct. 25.