Born of the massive Dodd-Frank Wall Street Reform Act, signed into law a year ago, the Consumer Financial Protection Bureau (CFPB) officially opened last week, it’s plate full and future clouded by attempts to dilute the agency’s power.
Without a director or full staff, the agency created to protect consumers when they sign up for a mortgage, credit card or other financial product, has already laid a strong foundation, a foundation a gang of bankers and Republicans are anxious to undercut.
Dissident Republicans already won the first battle, politically strong-arming the White House into choosing CFPB’s creator and champion, Elizabeth Warren, not as it’s director, but as a temporary, interim director, Special Advisor to the Secretary of the Treasury on the CFPB.
With a record of being one of the nation’s toughest consumer advocates, Warren would have been the best and bravest choice. Unfortunately, President Obama bowed to pressure and nominated Former Ohio attorney general Richard Cordray to run the agency and appease Republicans who threatened to block Warren’s nomination and shackle CFPB’s progress.
With the CFPB up and running, its Consumer Response Center is accepting credit card complaints on its website, ConsumerFinance.gov. Struggling homeowners can also get referrals to housing counselors via the Homeowners HOPE Hotline.
The nation’s first 21st-century consumer protection agency, the CFPB is the first new government agency embedded in social networking, using Facebook, Twitter stream, Flickr and YouTube to get the word in and out.
Over the coming months, the agency will expand its Consumer Response Center to handle complaints about other consumer financial products and services under its jurisdiction. The agency is also contacting large banks to put them on notice to follow the rule of consumer law, to let them know how the agency will supervise them and how it will enforce federal consumer financial laws.
“Above all, this means ensuring that consumers get the information they need to make the financial decisions they believe are best for themselves and their families — that prices are clear up front, that risks are visible, and that nothing is buried in fine print. In a market that works, consumers should be able to make direct comparisons among products and no provider should be able to build, or feel pressure to build, a business model around unfair, deceptive, or abusive practices,” wrote Warren on the bureau’s blog.
The CFPB’s role is three fold:
• Educate consumers to give them a first line of defense against abusive practices.
• Enforce federal consumer financial laws and supervise banks, credit unions, and other financial companies.
• Examine gathered and analyzed data to better understand consumers, financial services and consumer financial markets.
CFPB reveals some of the agency’s initial efforts in “Building the CFPB: A Progress Report.”
• The “Know Before You Owe Project” is a process for combining the complex and duplicative Truth in Lending Act and Good Faith Estimate mortgage disclosure forms into a single, useable form.
• CFPB has issued two new studies, the first study examines the variations between the credit scores creditors use and the scores sold to consumers by credit reporting agencies. The second report focuses on how a consumers remittance history could be used to enhance his or her credit score.
Much more is in store, including:
• Rules to implement the Privacy Act and the Freedom of Information Act, in order to establish a process for anyone who wants testimony or records from the CFPB for use in litigation. Also included are confidentiality rules, describing how the CFPB will treat information it obtains.
• Rules similar to those issued by the Federal Trade Commission and Securities and Exchange Commission that outline how CFPB will conduct investigations of federal consumer financial law violations.
• Rules stating procedures state officials should use to notify the CFPB of state actions or enforcement proceedings.