Allow the Consumer Financial Protection Bureau the Chance to Do Its Job
Charlene Crowell | 9/7/2011, 12:44 p.m.
Swift confirmation of CFPB Director Urged
If you've ever wondered how policy and regulatory decisions in Washington, D.C. affect daily living, the upcoming confirmation hearing for the new Consumer Financial Protection Bureau (CFPB) is an eye-opening example. Although the agency officially opened on July 21, it is functioning without a director - the top position empowered to ensure that the nation's financial reforms are effectively monitored and enforced. Without a CFPB Director, the office is limited in what it can do in important areas, such as setting rules for non-bank financial firms like payday lenders.
Even though the U.S. Senate is scheduled to begin hearings in a few days on the President's nominee, former Ohio Attorney General Richard Cordray, to fill this important post, those who opposed financial reform are still hoping to weaken the nation's financial watchdog. For example, 44 U.S. Senators signed a letter to the President stating that they would not vote to confirm any CFPB director nominee unless the CFPB was severely weakened. Instead of allowing a single and decisive director to lead the bureau, these interests are arguing for a five-member commission that would slow the pace of rule-making. They have also demanded changing the funding structure to make the agency less independent; and want to expand the veto ability of banking regulators - the same officials that got us into this mess in the first place.
The sum of these efforts leaves Cordray's nomination in a no-man's land of uncertainty.
For people of color and older Americans, the stakes could not be higher. The nagging recession brought about by risky mortgage lending hit Black and Latino communities the hardest. As the Center for Responsible Lending reported last year, over $350 billion of family wealth has been lost through foreclosures alone. But there are other measures that underscore how more financial reforms deserve decisive action. CFPB can provide vigorous enforcement and timely prosecution of nonbanks and banks that violate fair lending laws - particularly in mortgage lending. And CFPB is empowered to provide robust federal oversight in the following areas:
Alternative financial services - like payday lending and check cashing services that typically concentrate their stores in communities of color;
Student loan lending - ensuring that families unable to pay for a child's college education receive a fair loan with transparent terms and responsibilities; and
Credit card rate hikes - In these tough economic times, many families are using credit cards to remain financially afloat. With CFPB, no more will consumers face rate hikes at any time or for no reason.
Beyond a score of valid racial concerns, generational issues affecting senior citizens equally deserve the attention of the CFPB Director. Each year, according to the Investor Protection Trust's June 2010 survey, the annual loss from financial crimes and fraud against older Americans is estimated to be at least $2.9 billion. The majority of these victims are in their 80s and living alone. Additionally, the MetLife Study of Elder Financial Abuse published June 2011 found that Americans 55 and older carrying debt in excess of 40 percent grew faster than any other age group.
At best, the proposed 'reform of reform' bills are premature; at worst, they are a brazen attempt to preserve privilege and profits for large lenders at the expense of everyday citizens.
The Center for Responsible Lending has joined with other local, consumer and civil rights organizations in calling for Washington lawmakers to allow the CFPB to do its job without weakening the agency. Our nation has already seen and suffered when banks were allowed to make their own rules. Most importantly - CFPB has numerous built-in checks and balances to ensure that it creates a consumer finance market place that works for American consumers, responsible providers and the economy as a whole.
The Senate would be wise to swiftly confirm the first CFPB director. An entire nation is waiting. Allow the CFPB to do its job.
Charlene Crowell is a communications manager with the Center for Responsible Lending. She can be reached at: Charlene.firstname.lastname@example.org.