Consumer protection bureau isn’t doing much protecting
In the Trump administration’s fight with Senator Elizabeth Warren and the Consumer Financial Protection Bureau, “freedom” is just another word for letting dodgy companies make money by using people.
The consumer bureau, which Warren first proposed, was established in 2011, in the wake of a financial crisis built on subprime mortgages that many borrowers didn’t fully understand and couldn’t hope to repay. In its first six and a half years, it pushed lenders to explain mortgage terms more clearly; fined Wells Fargo for opening accounts in people’s names without their permission; put forth rules requiring so-called payday lenders to verify that borrowers can repay their loans; and sued a firm called Freedom Debt Relief, which ostensibly helps people catch up on their debts, for overstating its services while collecting stiff fees.
Late last year, though, President Trump got control of the bureau and installed his budget chief, Mick Mulvaney, as acting head. As a congressman from South Carolina, Mulvaney cofounded the anti-regulation House Freedom Caucus and slammed the Consumer Financial Protection Bureau as “sick,” “sad,” and “extraordinarily frightening.” Lately, Mulvaney has been undermining the agency from the inside — walking back recent moves by the bureau and signaling to consumer-finance companies that the pressure is off.
This version of freedom is entirely one-sided. Corporate lobbyists go on and on about the need for predictability and transparency in the marketplace. Fair enough, but why don’t consumers deserve the same?
“Proponents [of deregulation] will typically talk about freedom or access or choice,” said Joe Valenti, director of consumer finance for the Center for American Progress, a liberal think tank. “Nobody ever talks about whether it’s access to good credit or bad credit.”
One of the worst things about Trump’s presidency is how his antics crowd out discussion of the policies he and his allies are pursuing just offstage. If Trump didn’t keep calling Warren “Pocahontas,” his assault on the agency she created might get more attention. If the president weren’t squabbling with a porn star or firing the secretary of state in a tweet, more Americans might notice that, on a vast range of issues, his administration is making lots of concessions at consumers’ expense.
Should the FCC promote competition among Internet services — or give the cable and broadband monopolists more power over what customers see? Should for-profit colleges face sanctions for low performance — or should students who go into debt for worthless degrees be left to their fate? Should financial counselors have to act in their clients’ best interest — or do they need the freedom to offer advice that maximizes their own profits? At every turn, the administration is giving succor to industry lobbyists.
What this kind of freedom means to consumers is: Let the buyer beware.
For the average adult with lots of obligations and little time, it’s tough enough to do due diligence on a mortgage; it’s harder still when lots of transactions involve lots of legwork. Trump’s supporters are all riled up about having to press 1 for English, when the real problem is the sheer number of corporate phone trees consumers have to navigate. Got a problem with your mortgage, your broadband service, or the retirement plan that’s entirely up to you to manage? Please continue to hold. You are the — pause — 11th — pause — caller in line, and someone will be with you shortly.
When Warren proposed the consumer bureau, some skeptics assumed it was a feel-good measure. But the intensity with which the financial industry loathes the agency shows that there’s something fundamental at stake: The inherent complexity of many financial transactions shouldn’t be an excuse to rook people.