On July 21, the first federal agency dedicated to serving the financial needs of consumers will be 5 years old. Created in the aftermath of the worst financial calamity since the 1930s Great Depression, the Consumer Financial Protection Bureau was created through the enactment of the Dodd-Frank Wall Street Reform Act.
When voters were recently asked their thoughts about CFPB, three out of four said that financial accountability and tough regulations are still needed. The poll, jointly commissioned by the Center for Responsible Lending and the Americans for Financial Reform, posed a series of question to 1,000 likely voters. Since 2012, this annual national telephone poll has been performed by Lake Research Partners.
When consumers were asked whether more financial regulation was needed, 69 percent of all respondents said yes. Only 12 percent believed that these firms have changed their practices enough to not warrant further regulation. Even when partisan preferences were factored into this answer: 52 percent of Republications and 68 percent of independents agreed. The highest percentage of partisan agreement on this question came from Democrats, with 84 percent.
Voters were also asked whether more financial oversight was needed. Among all respondents, 66 percent agreed, including nearly half of Republicans (49 percent). Sixty-three percent of independents and 85 percent of Democrats said that more financial oversight was needed.
If anyone wonders why consumer support still strongly favors financial regulation, perhaps the experiences of approximately 859,900 consumers who received $3.4 billion in restitution since CFPB’s creation is a reason. As of March 31, other CFPB accomplishments in its five-year history include:
An additional $7.75 billion of additional consumer relief was returned for cancelled debts, principal reductions and other actions.
For the first time, debt collection companies that plague 30 million consumers are now under federal supervision.
Ask CFPB, the Bureau’s online resource, has been accessed by 10 million consumers.
“The premise that lies at the very heart of our mission is that consumers should have someone standing on their side to see that they are treated fairly in the financial marketplace,” noted Richard Cordray, CFPB director. “Each day, we work to accomplish the goals of renewing people’s trust in the marketplace and ensuring that markets for consumer financial products and services are fair, transparent, and competitive.”
Cordray added: “These goals not only support consumers in all financial circumstances, but also help responsible businesses compete on a level playing field, which helps to reinforce the stability of our economy as a whole.”
Over the past year, CFPB’s enforcement actions included a $531 million default judgment against the now-defunct Corinthian Colleges for engaging in a predatory lending scheme, and two separate actions involving discriminatory auto financing by Toyota Motor Credit ($21.9 million) and Honda Finance Corp. ($24 million). Both auto finance firms charged minority borrowers higher interest rates without regard to their credit worthiness or other objective criteria. The Equal Credit Opportunity Act makes such actions illegal.
Additionally in early July, a joint investigation by CFPB and the Department of Justice resulted in a $10.6 million fine for redlining practices that harmed Black and other minority consumers. Bancorp South, operating in 8 states, settled the complaint after the agencies found it instructed loan officers to “turn down” minority applicants more quickly than white applicants and not to provide credit assistance to ‘borderline’ applicants that other applicants may have received.
Yet, despite these notable achievements, CFPB still faces fierce and unrelenting attacks. In recent months, multiple legislative initiatives have been introduced that aim at weakening the Bureau by replacing CFPB’s director with a gridlocked commission or allowing Congress to place restrictions on its enforcement actions.
“Some in Congress continue to not only attack the CFPB for its oversight of financial services, but are still trying to pass provisions that would block it from doing its job,” noted Yana Miles, a CRL policy counsel. “Allowing enactment of these bills would only undermine the progress the CFPB has accomplished and severely restrict its future financial oversight.”
“Nearly five years following the creation of the Consumer Financial Protection Bureau, consumers are still calling for financial accountability,” said Mike Calhoun, CRL president. “Efforts to bring transparency and fairness to personal finance may have begun. But these new results signify that our work must continue. Every consumer is entitled to financial fairness.”