11.28.17

SHAKEUP AT THE CONSUMER FINANCIAL PROTECTION BUREAU

By: Robert E. Mazow, Esq.

It was a dramatic power play at the offices of the Consumer Financial Protection Bureau this week when two people who both claimed to be acting directors showed up for work.

Last Friday, CFPB Director Richard Cordray abruptly resigned, and pursuant to the Dodd-Frank Act, appointed Leandra English as the CFPB’s acting director.

President Trump, a vocal critic of the Bureau, then appointed his own acting director, Mick Mulvaney.

As a result of the conflicting appointments, both appointees appeared for work Monday claiming to be the true acting director. In the end, Mulvaney retained control and will presumably stay unless and until a court rules otherwise.

So, what does this mean for the future of the CFPB and victims of fraud and corporate abuse?

The agency was established in the wake of the 2008 financial crisis as a watchdog against corporate and financial abuses. The Bureau is perhaps the best know for levying a $100 million fine against Wells Fargo for opening hundreds of thousands of deposits and credit catered accounts without their customers’ knowledge or consent.

Since its inception, the CFPB has saved and/or recovered nearly $12 billion for consumers.

But President Trump and Wall Street don’t like the agency, and Trump has called it a “total disaster”.

The appointment of the most recent acting director is telling for the agency’s future as Mulvaney was harshly critical of the agency when he was in Congress. While Mulvaney has denied that he is going to shutter the agency, it is likely that he will have an impact which could result in less protection for consumers and victims of financial abuse. He immediately put a 30-day hiring and regularly freeze in place and instructed that no payments are to be levied on civil penalties for at least 30 days.

If his appointment remains, Mulvaney will have the power to set the agenda for the agency which he once called a “sick, sad joke.” The agency, which has given consumers a voice where they hadn’t been represented before, has created new mechanisms for citizens to bring complaints and concerns about financial institutions and products.

The Bureau was specifically intended to have an independent role in government, but the appointment of Mulvaney could mean the disempowering and dismantling of the agency.

This would be a disaster to consumers if it is shuddered or weakened. The CFPB provides a place for those to go who’ve had complaints about a bank, mortgage lender or student loan servicer. Consumers have been able to submit complaints about a financial product or service, the CFPB then sends the complaints to the company involved, and the company has 15 days to respond. The outcome is that companies are forced to do better and treat consumers fairly or be subject to substantial fines.

Without an independent watchdog like the CFPB, consumers are left to fend for themselves and will be subject to unscrupulous behavior. In the end, consumers will be irreparably harmed without true independence in the agency.

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10.30.17

CONGRESS SIDES WITH BANKS AND LENDERS DESPITE KNOWN RISKS TO CONSUMERS

By: Michael C. Forrest, Esq.

Late Tuesday night, October 24, 2017, all but two Republican members of the Senate voted to kill a rule authored by the Consumer Financial Protection Bureau. The rule, which was set to go into effect, was aimed at preventing restrictive forced arbitration agreements in consumer contracts and re-opening the court system to injured consumers.

However, despite recent well-known incidents such as the Equifax data breach and Wells Fargo’s admitted intentional unlawful behavior, Vice President Mike Pence (the vice president was required to provide the tie-breaking vote) and all but two Republican members of the Senate decided that a consumer’s right to pursue his/her claims in a court should be abridged so that financial institutions can unilaterally impose often unfair arbitration procedures.

Opponents of the Consumer Financial Protection Bureau’s anti-arbitration clause rule have consistently and narrowly framed the issue as an “anti-class action” issue, while ignoring the reality that forced arbitration not only precludes a claimant’s right to collective action, but wholly eliminates a consumer’s right to his or her individual day in court. Further, the opponents of the Consumer Financial Protection Bureau’s anti-arbitration clause rule entirely ignore the well understood reality that financial institutions impose draconian conditions upon consumers before the consumer is entitled to bring his or her arbitration claim.

By siding with banks and lenders, rather than consumers, Republican members of Congress have made clear that they do not believe that an aggrieved consumer  should be permitted to fight a financial institutions injustices, and moreover, have essentially raised a flag in support of businesses over consumers; a story all too familiar over the last few years.