Letter to the Editor Supporting the CFPB and the Dodd Frank Act
I can’t believe that the votor mandate for the people that were voted in in November was a mandate to roll back consumer protections to the bad old days.
Anyway, I drafted a letter to the editor of the Indianapolis Star, my hometown newspaper, and I am publishing it here whether or not it gets published in the paper. and it is published below.
Save the CFPB and The Dodd Frank Act
Most Americans have never heard of the Consumer Financial Protection Bureau, or even its initials, CFPB; but if you ask most Americans if they think the government should have an agency that protects people from financial frauds and rip-offs, safeguards their savings and makes sure the banking system is sound, most people would say “absolutely yes”. That’s exactly what the CFPB does. Even though most Americans approve of the CFPB’s mission, and the CFPB has been successful in accomplishing that mission, the new Congress and the Trump Administration are trying to fast-track legislation to eliminate the CPFB. I want to tell you why you shouldn’t let that happen.
The CFPB wasn’t even formed until 2010, but in its first five years, the CFPB has recovered $11.7 billion dollars for consumers. Basted on its annual budget of around $600 million, the CFPB has paid for itself roughly four times over just in its recoveries for consumers. The CFPB does a lot more than just recover cash for consumers. It sets the standards for fair dealing in the financial marketplace. The CFPB has instituted new rules that eliminated some of the most unfair practices in the credit card industry. The CFPB has a department that is dedicated to eliminating scams targeting service members. The CFPB has targeted predatory practices involving payday loans and student loans. The CFPB has handled more than one million consumer complaints involving financial institutions.
As a consumer advocate attorney representing homeowners in mortgage foreclosure cases, I saw first-hand the difference in the marketplace before and after the CFPB. In the wild 90s through the Great Recession in 2008, the subprime mortgage market was like Dodge City. Consumers were being ripped off by predatory loans that were shockingly unfair but in some cases completely legal. These predatory loans and the questionable investment products that supported them crashed our economy in 2008. This was a crash caused, not by excessive regulation, but by too much greed and too little regulation. The Dodd Frank Act and the CFPB put new standards in place that eliminated the worst abuses in the mortgage market, and provided a framework for lenders to modify mortgages to keep consumers in their homes. Initially the lenders fought these modifications, but eventually the lenders realized that even they benefited by fair modifications that turned nonperforming loans into performing loans and reversed a downturn in home values that threatened all their loans.
Consumers don’t even see what could be the CFPB’s most important function, and that is supervising financial institutions, making sure they have enough capital to weather a market downturn so the institutions won’t have to be bailed out by the federal government down the road.
Despite the CFPB’s achievements, this agency has been targeted for elimination by the Trump administration. This is nothing but a naked ploy by the financial crooks to get rid of the cop on the beat. To justify their actions, the supporters claim the financial industry cannot thrive under the CFPB and Dodd Frank Act. This is a lie. Even under the CFPB, bank profits are at or near record highs. Commercial and consumer lending is thriving.
I urge all who read this to contact your senators and representative and tell them to vote the way of the public and not the way of the lobbyists, and vote to save the CFPB and the Dodd Frank Wall Street Reform and Consumer Protection Act.
Steven Hofer
Indiana State Chairperson
National Association of Consumer Advocates
