Let’s talk about consumer protection.
So Ted Cruz just proposed a bill with the sole purpose of eliminating the CFPB. Let’s talk about this “controversial watchdog agency” that Cruz — that other scary white guy who would was almost our president — and his Republican buddies are going after with such gusto.
The Consumer Financial Protection Bureau (CFPB) was created by the Dodd-Frank act. (This entire act is a prime target of Republicans, so you’ll likely be hearing a LOT about it during the coming administration. The interwebs are full of Elizabeth Warren speaking about it if you’re curious). Dodd’s full name is Dodd-Frank Wall Street Reform and Consumer Protection Act, and it was passed in direct response to the Wall Street disaster that hit the fan in 2008. There are many components of the Act; it’s complicated and nitty-gritty and I don’t understand it but right now I’m just talking about Title X of Dodd, which created the CFPB.
The point of the CFPB is consumer protection. You can tell — it’s right there in the name. It’s something designed to make sure that consumers, when borrowing money from banks for things like mortgages or student loans, don’t get screwed by unfair, predatory practices. And the only people who benefit from dismantling a bureau that focuses on consumer protection are the entities the consumers need protecting from.
Consumer protections help in a lot of different ways. For example, they help challenge the forced arbitration clause that you unknowingly agree to every time you purchase a ticket, or they assist victims of robocall or telemarketing scams. A lot of times, when a business does something that’s unfair and warrants consumer protection, the infraction is so minor that most people don’t even bother pursuing it (like that $2.99 charge you randomly get every few months from AT&T but just don’t have the energy to make that phone call about today). Without agencies devoted to protecting consumers, these violations go unnoticed and the predatory act continues. (Side note: veterans and service members are huge beneficiaries of consumer protections because things like deployment and frequent moves place added financial burdens on these individuals and their families).
One of the most important elements in a consumer protection issue is power imbalance. We aren’t talking about a shopper vs. a mom and pop store on the corner; we are talking about two parties engaging in a business transaction where one party has power, knowledge, experience, money, etc., and the other does not. And the power imbalance at issue with CFPB regulations is remarkable. It is literally the haves — big financial institutions with virtually unlimited resources — vs the have-nots.
All states have consumer protection agencies. They go hand in hand with a free market, capitalist economy. You just can’t trust (all) big businesses to think of the powerless when they make business decisions — they are beholden to their investors and not to their consumers. Sometimes, the government has to step in and put a stop to abusive practices, and the CFPB was designed to do just that with respect to mortgages, credit cards, and student loans. Here are some of the ways the CFPB has helped, and some reasons it’s necessary. Unfortunately, there’s no other federal regulation agency designed to do what the CFPB is doing. According to the NYT:
“Reducing the bureau’s power would deal a blow to consumers, because other federal finance regulators just don’t have their interests at heart. Entities such as the Federal Reserve Board and the Office of the Comptroller of the Currency are charged with monitoring banks for safety and soundness. Historically, this has translated to a regulatory focus on profitability at these institutions. And if those profits come at the expense of consumers, well, c’est la vie.” (emphasis added).
While Drumpf spells disaster for people concerned about things like fascism and human rights, he also represents the first time in recent history that ultra-rich, white Republicans have control of all of the branches of government (save Scalia’s seat on the Supreme Court) and so can remove regulations easily. If you’ve found yourself wondering why Republican lawmakers are willing to look the other way when Drumpf does the most absurd of absurd things, it’s because their priority is an unfettered market. And Drumpf is giving them exactly what they (and he) want.
So. Now what? Stay informed. Talk to people. This is an issue that should be bipartisan and uncontroversial. The CFPB is something that everyone except the richest of the rich should support, and Republican lawmakers are selling the soul of our country in order to dismantle it and the protections it provides. If you truly are interested in protecting working class individuals, you should support this agency and other consumer protection agencies, and other checks on the power of large financial institutions.
Oh, and you should also call your members of congress and let them know how you feel about it, too.