The Consumer Financial Protection Bureau (CFPB) celebrated four years as a financial regulator and educator this week. The bureau promoted the event with a variety of blog posts, calls to action on social media and talk show visits by Director Richard Cordray, all of which promoted the bureau as the consumer’s watchdog which works “to ensure banks and other financial companies treat consumers fairly.”
As part of the festivities, the CFPB promoted its activity over the past four years. Beginning with the most recent bureau unveiling of public consumer complaints, the CFPB emphasized a few of the 650,000 narratives it had received as evidence of how the bureau’s focus is to help everyday people. These include stories of consumers dealing with predatory auto loans, errors on credit reports, credit card debt collectors, student loan woes and troubles with mortgage lenders.
The bureau highlighted the $10.8 billion it is has collected from financial institutions on behalf of consumers and its free tools and resources on its website, including the Owning a Home, Paying for College and AskCFPB tools.
The CFPB’s anniversary, which was also the fifth anniversary of the Dodd-Frank Act, also predictably became a soapbox for Washington lawmakers to take a stance on the financial reform laws. Unsurprisingly, Democrats showed strong support for both the bureau and Dodd-Frank, whereas Republicans emphasized their strong distaste for both.
“Five years and nearly 13 million jobs later, the Dodd-Frank Wall Street Reform Act has put our nation on a path to economic recovery. Today, our financial system is safer, more accountable, and more transparent,” said Rep. Maxine Waters (D-Cal.), who is the Ranking Member of the House Financial Services Committee. “The financial crisis represented the worst financial disaster in a generation. And in the face of relentless Republican attempts to roll back these critical reforms, Democrats remain committed to fighting to protect American consumers from the worst actors in our financial system.”
“Dodd-Frank established critical tools to empower Wall Street cops on the beat, end the era of bank bailouts, and successfully launched the only federal agency dedicated to protecting the financial interest of American consumers,” Waters added. “Wall Street reform remains highly popular among the American people. It’s time for Republicans to acknowledge this fact and continue the real work of ensuring that all Americans benefit from our robust recovery.”
Other Democrats, including President Barack Obama and fomer U.S. Secretary of State Hillary Clinton, came out in strong favor of the bureau and Dodd-Frank.
On the other side of the aisle, Rep. Jeb Hensarling (R-Texas), spoke out about the negative impacts of the law on the economy and on businesses.
“If we want strong economic growth, more freedom and an end to bailouts, it’s time we commit to making sure this anniversary is Dodd-Frank’s last,” Hensarling, the chair of the House Financial Services Committee, said in his Weekly Republican address on July 18.
“What is most disturbing about Dodd-Frank is the authority it gives bureaucrats to control huge swaths of the economy,” Hensarling continued. “The director of the Consumer Financial Protection Bureau, an agency created by Dodd-Frank, can declare any consumer credit product ‘unfair’ or ‘abusive’ and outlaw it. Oversight? CFPB funding is not subject to Congressional appropriations, and Dodd-Frank requires courts to grant the bureau deference regarding its interpretation of federal consumer-financial law.”
He emphasized this point further in an opinion piece in the Wall Street Journal, entitled “After Five Years, Dodd-Frank is a Failure.”
By means of compromise, some democrats and republicans are discussing what they call a Dodd-Frank “fix-it” bill. The legislation is intended to improve upon legislation proposed by Senate Banking Committee Chairman Richard Shelby (R-Ala.), which was written with almost no feedback and a scant chance of passing, Sen. Mark Warner (D-Va.) said.
In committee, the legislation took a 12-10 vote along party lines to advance the bill, which would exempt SunTrust Banks Inc., U.S. Bancorp, PNC Financial Services Group Inc. and other banks from some of Dodd-Frank’s supervision and capital requirements.
“I like Dick Shelby,” Warner said. “Shelby is a friend of mine. I’ve traveled with Dick Shelby. The way he put together this bill was not serious. …There’s a group of reasonable Republicans and Democrats talking about a Dodd-Frank fix-it bill that would be focused, tailored,” Warner said, adding that he is open to eliminating some regulations, including the annual resolution plans required for regional banks.
“We all agree that $50 billion is probably the wrong number,” he said in reference to the threshold for increased oversight. He did not say what he believed would be the right amount.
“I think it’s less about asset size and more about business product size,” he said.
Despite reform bills and arguments against Dodd-Frank in general, its issue, the CFPB, is still going strong and just this week issued enforcements against Discover for its student loan servicing practices and Citibank for deceptive marketing and unfair billing of credit card add-on products and services. The bureau also recently finalized the Military Lending Act, which expands the types of credit products covered by the 36 percent rate cap and other military-specific provisions.