During this National Consumer Protection Week, it’s especially worth remembering that the last thing any worker needs when working two or more jobs to make ends meet, is to be ripped off by predatory loans or “gotcha” fees charged by lenders, banks, or credit card companies. And what workers need even less is a Congress that weakens the very agency that’s standing up to those big financial interests.
One of the National Hispanic Leadership Agenda’s (NHLA) key policy priorities is to economically empower Latino workers and families. This cannot be accomplished without strong safeguards to protect hard-working people’s incomes from being siphoned off by predatory lenders.
Abusive financial practices add up to big bucks. According to the Center for Responsible Lending, the fees associated with payday and car title loans cost workers in America nearly $8 billion per year. For Latinos, the impact is even greater. In the lead up to the Great Recession, financial institutions steered Latino families into subprime loans, even when those families could have qualified for a conventional loan. This led to higher default rates, foreclosures, and an evisceration of two-thirds of Latinos’ household wealth.
With these facts in mind, it is unconscionable that certain members of Congress have proposed to undermine the one agency that effectively protects consumers from predatory financial practices. The Consumer Financial Protection Bureau (CFPB), created in the Dodd-Frank financial reform law as a response to the financial crisis that triggered the Great Recession, has been instrumental in curbing unfair and deceptive practices.
In less than six years since opening its doors, the CFPB has already curbed several unfair and deceptive practices in the financial marketplace, bringing transparency to the remittance industry, stopping credit card companies from adding on products that consumers never agreed to, and requiring mortgage lenders to ask applicants for proof of their income before making home loans. These actions have helped put Latino families, and all Americans, on a path to greater financial security.
Despite the gains consumers have experienced thanks to the CFPB’s actions, efforts are underway to rip the teeth out of the CFPB and turn it into a weak agency that cannot stand up to the financial industry. This would once again leave everyday workers and consumers at the mercy of big financial businesses.
To ensure Latinos, and all Americans, do not lose the only federal agency entrusted to protect the interests of consumers, we urge Members of Congress to do five things to maintain the CFPB as the strong consumer watchdog that we all need.
- Defend Director Richard Cordray and avoid attempts to remove him before his term expires: A challenge to Director Cordray’s authority is a challenge to the consumer agency itself. The Director’s willingness to stand up to Wall Street titans is exactly the kind of leadership consumers need, and voters overwhelming support the agency’s work. A 2016 poll found that three-in-four voters support tougher rules to address the unscrupulous practices that caused the financial crisis.
- Keep the agency’s single director and oppose efforts to replace it with an ineffective bipartisan commission: If the director’s position were replaced with a commission, the consumer agency would fall into a pattern of gridlock and a chronic unwillingness to challenge the industries it is charged with overseeing. The Comptroller of the Currency, a much larger federal bank regulator, as well as the Federal Housing Finance Agency and Social Security Administration are also headed by single directors.
- Resist efforts to shrink the CFPB: If the CFPB were denied the ability to continue growing, or at least maintain, its workforce, the Bureau’s functions would be severely limited.
- Preserve the consumer agency’s independent funding and prevent the agency from relying on annual congressional appropriations: If Congress were to fund the consumer agency each year, bank lobby interests would encourage the use of the appropriations process to starve the CFPB of the funds needed to do its job. The prudential regulators—the Department of the Treasury (the Office of the Comptroller of the Currency), the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation—are all funded independently of the appropriations process to insulate themselves from political pressure by the very entities they are designed to regulate, the banking industry.
- Maintain the consumer complaint database: Eliminating the consumer complaint database would cripple the agency’s ability to protect consumers by collecting, monitoring, and responding to complaints. The CFPB sends thousands of consumers’ complaints each week to companies for response, handling more than 1 million total complaints as of January 2017.
This National Consumer Protection Week, join me in calling on Congress to allow the CFPB to continue its important work on behalf of consumers, and thus preserve opportunities for Latino families, and all Americans, to build and maintain wealth for this generation and the next.