On the Consumer Financial Protection Bureau, its influence on Wall Street, and its looming end.

by whenitsTimeyoullknow

There’s a lot to unpack here. First: check out this news reported by the Washington Post, and understand that it’s presented through the lens of their owner (Amazon, who has a $600 million contract with the CIA). A company, RD Legal, was being sued for having allegedly scammed former NFL players and 9/11 emergency medical workers out of millions of dollars. The NY District Court tossed out the lawsuit and ruled that the Consumer Financial Protection Bureau (CFPB) is unconstitutional and should be dissolved.

Second, let’s examine the Consumer Financial Protection Bureau. It was created through the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, has grown to 1,623 employees, and has an annual budget of $605.9 million. From the article: “The independent structure of the CFPB has long been at the center of a partisan debate over the agency, created during the Obama administration in response to the global financial crisis. The CFPB is ruled by a single director rather than a multi-member commission and gets its funding from the Federal Reserve rather than Congress. The bureau’s director also can be fired only for cause, by the president, another element of independence.” Side note: I’m linking to Wikipedia with the understanding that it can be biased and compromised, but that it is a good source for indisputable information (e.g. Dodd-Frank was signed into law by Obama on July 21, 2010).

We have to assume that any bill created by the US Congress to “reform Wall Street” after the 2008 financial crisis is more focused on placating the public than reigning in corruption at the highest level. Two factors contribute to this assumption: The significantcampaign contributions from all major Wall Street banks to most politicians (D and R) and the fact that these companies are getting wealthier and more consolidated than ever (two things we shouldn’t expect to happen after a major punitive bill).

The CFPB was originally chaired by Elizabeth Warren, a woman who 1) probably wouldn’t have had such a meteoric rise in popularity if not for the fact that she is controlled opposition and 2) seems to be genuinely hated by major Wall Street organizations. Very quickly, it transitioned to being a small bureau within the Federal Reserve System run by a figurehead.

Disappointingly ineffective as the CFPB may be, it has at least more than paid for itself by (as of a year ago) returning $11.9 billion to consumers and compensated 29 million Americans for being swindled by banks, lenders, and credit card companies.

What makes that “disappointingly ineffective”? Personally, my ideal independent consumer finance watchdog would be leading guys like Lloyd Blankfein to permanent new homes in federal penitentiaries; when a financial company swindles consumers out of a certain amount of money, the fines lobbied by the CFPB would be larger than the revenue generated from the illegal practice (and not a fraction); it would have the power and the motivation to levy corporate death sentences to companies like Citigroup. In short, it would be an organization that makes top bank executives regret their roles in the subprime mortgage lending fiasco and makes other top financial executives too afraid to attempt anything similar. Instead, we have an organization that offers slaps on wrists and which ignores sharks to hunt minnows. The biggest shark, of course, being the organization controlling the CFPB: the Federal Reserve.

We take what we can get, though. Sadly, the man who Donald Trump (the individual in charge of appointing and replacing CFPB directors as long as he holds the POTUS title) appointed to replace Obama’s last figurehead was Mick Mulvaney. In a nutshell, Micksaid in 2010 “I have yet to meet someone who can articulate the negative consequences [of defaulting on our national debt].” As far as I can tell, Scott Pruitt is to the EPA as Mick Mulvaney is to the CFPB. Like the EPA, though, one man does not an organization make, despite his enthusiastic support of financial areas like the payday lending industry.

Now, we have a new nominee: Kathy Kraninger. I won’t pretend to know anything about her (few do, on a national level). I do think that it would be surprising if she proves to be a stalwart of protecting consumers. The basic point of all this is this:

The Consumer Financial Protection Bureau has been gutted from the inside through legislature, through directors with anti-consumer agendas, and through now the judicial branch. The next step will probably be the Supreme Court, which has the power to snuff the CFPB out for good. I’m no financial expert and I’m no journalist; I just think that it’s our duty to keep abreast of happenings that could increase the power of the already-powerful and decrease the rights of the already-downtrodden.

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