The findings of a new poll for Americans for Financial Reform and the Center for Responsible Lending show record numbers of voters, across party lines and on a transpartisan basis, want both a strong CFPB and strong Wall Street, payday lender and debt collector oversight. They want a financial marketplace that's not full of tricks-and-traps and a system that's not rigged.
"Over nine in ten voters (91%) say it is important to regulate financial services and products to ensure they are fair to consumers, including 68% who say it is very important. Wide majorities of Democrats (94% important; 74% very important), Republicans (90%; 63%), and independents, (84%; 60%) agree that it is important.
Nearly three-quarters of voters (74%) believe that Wall Street financial companies should be held accountable with tougher rules and enforcement, while only one in ten (10%) believe that their practices have changed enough that they don’t need further regulation."
Will returning and new Congressmembers listen to these Republican, Democratic and Independent voters and undo this Administration's myriad rollbacks of consumer and small investor financial protections?
Unfortunately, Trump Administration financial regulators have been doubling down on efforts to roll back protections. Their newest proposals and final rules could be called "Nightmare on Wall Street III" or "Return of the Zombie Debt Collectors 2" or worse.
Just ten years after the Dodd-Frank Wall Street Reform and Consumer Protection Act was passed to clean up the financial marketplace after the Wall Street-induced 2007-2008 economic collapse and ensuing Great Recession, financial regulators are running amok -- during a pandemic, no less. Here are a few recent examples:
- In July, Consumer Financial Protection Bureau (CFPB) director Kathy Kraninger completed her efforts to gut payday lending protections enacted under the CFPB's first director, Rich Cordray. Payday lenders don't need to check whether a customer have an ability to repay their high-cost loan offerings.
- Both the federal Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation have taken recent steps to allow predatory payday lenders to partner with banks to use their charters (known as "rent-a-bank" schemes) to evade strong state consumer laws that restrict the interest rates that can be charged.
- Despite a lack of support from the third prudential bank regulator, the Federal Reserve Board, OCC and FDIC have also proposed weakening the Community Reinvestment Act, which simply says banks must make loans and serve the communities where they take deposits (our coalition letter). As I wrote for the American Prospect following the 2008 collapse: "In short, CRA is not only one of the simplest regulatory laws ever passed by the Congress, it may be one of the most successful. It doesn't impose command-and-control mandates or prescriptive rules. It does not require, nor has it generally resulted in, banks making loans at a loss.
- In October, Kraninger announced a reorganization of the CFPB's supervision and enforcement arms that Senate Banking Committee ranking member Sherrod Brown (OH) called inappropriate "just weeks before an election." An industry law firm went even further in its announcement for a Wednesday (10/28) webinar: "The change amounts to the single most effective effort by the CFPB to weaken its own Enforcement arm since the Trump administration took over."
- The CFPB is widely expected to soon finalize a rollback of protections against the collection of time-barred debt (coalition letter joined by state PIRGs). If it happens this week, the re-animation of zombie debt fits both a classic political "October surprise" and a Halloween theme, except that the Halloween tricks will never end.
- Meanwhile, according to Barb Roper of the Consumer Federation of America, the Department of Labor, as expected, has proposed to subject vulnerable retirement savers to conflicted advice. It's not surprising, as the DOL took its marching orders from the Securities and Exchange Commission, where chairman Jay Clayton is implementing his own Orwellian "Best Interest Rule," which is in the best interests of broker-dealers, not small investors. Meanwhile Clayton has launched a wholesale assault on longstanding SEC rules on broker-dealer registration requirements. Here's an opposing statement on one of his proposals from SEC Commissioner Allison Herren Lee.
The poll for AFR and CRL by Lake Research Partners shows strong support for a strong Consumer Financial Protection Bureau:
"The CFPB has the support of at least three-quarters of voters in all major subgroups and is viewed favorably by over 80% in most. Men (51% strongly favor) and older voters (50%) are most intensely supportive. At 83%, the overall support in favor is the highest it has ever been since the question was first asked in 2013, and 7 points higher than last year."
During a pandemic, when consumer complaints to the CFPB are setting new records, consumers need a strong CFPB. They don't have one now, but as I often say, the idea of the CFPB needs no defense, only more defenders. Congress should read the polls. Voters want a financial marketplace that's not full of tricks-and-traps and a system that's not rigged.
Photo credit: “Protest at the CFPB” by Joe in DC. Some rights reserved: CC by-nc-nd/2.0.