Consumer Financial Protection Bureau Under Fire from the Right – Part Three

Three-part article from The New York Times on how the present administration intends to neuter the Consumer Financial Protection Bureau continues.

By STEVE EDER, JESSICA SILVER-GREENBERG and STACY COWLEY, September 2, 2017 for The New York Times

The consumer agency had been collaborating with the Department of Education on overhauling the $1.3 trillion student loan market to ensure that private companies collecting loan payments abided by consumer protections.

But soon after Betsy DeVos was appointed education secretary this year, the department scrapped much of that work. In particular, the department eliminated a requirement that federal student loan servicers adopt a simplified repayment disclosure form that the consumer bureau spent years developing.

Lobbyists are also feeling empowered by the change in administrations. Working on behalf of payday lenders, they have flooded the consumer agency with comments, more than a million in all, urging it to halt a proposed crackdown on the industry.

At some payday loan counters, customers were handed comment forms alongside their checks and urged to tell the bureau just how important payday lending was to their livelihood. Hundreds of thousands of those comments, often with nearly identical wording, poured into government databases.

So far, that push has not deterred the bureau. Within the agency, there is a mounting sense of urgency to get the final version of the payday rules out, according to two people familiar with the process. The new rules would represent the first time that the lucrative market — the payday industry collects $7 billion annually in fees — was directly regulated by the federal government.

The bureau’s rollout last month of its rule allowing class-action lawsuits in some arbitration cases has also rattled Wall Street, and is widely seen as a provocative stance against the prevailing political momentum in Washington.

Opponents of the rule have received an assist from the Trump administration. Keith Noreika, the acting currency comptroller, who serves as the chief bank regulator, asked Mr. Cordray to delay publication of the rule, saying his staff needed more time to review whether it posed a threat to the safety and soundness of the banks.

Mr. Cordray, in a response to Mr. Noreika, said the idea that class actions were a threat to the banking system was “plainly frivolous.” (He also said he had already sent the rule to the Federal Register for publication a week before he received Mr. Noreika’s letter.)

                                     Senator Lindsey Graham, Republican of South Carolina

A challenge to the rule passed the House, but has stalled in the Senate. Senator Lindsey Graham, Republican of South Carolina, has said he would not back a repeal of the rule. Other Republicans are also wavering.

“Moderate Republicans don’t want to be painted as anti-consumer,” said Isaac Boltansky, the director of policy research at Compass Point, a research firm tracking the fate of the agency’s recent rules.

End of Three Part Article

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