The Consumer Financial Protection Bureau has rightly emerged as the hero in the story this month about fraudulent practices at Wells Fargo. The bureau was the lead agency in the investigation of the bank, where some 5,300 employees (now fired) illegally opened millions of unauthorized bank and credit card accounts in customers’ names in order to meet aggressive sales targets. Wells Fargo must pay a penalty of $100 million, the largest ever issued by the bureau, plus $85 million to other regulators and restitution to customers who incurred fees on the sham accounts.
And yet, congressional Republicans cannot stop bashing the bureau as a rogue agency unaccountable to the public. On Monday, just days after the Wells Fargo settlement was announced, House Speaker Paul Ryan tweeted, “The #CFPB supposedly exists to protect you, but instead it tries to micromanage your everyday life.” The next day, Republican members of the House Financial Services Committee approved a bill, the Financial Choice Act, that would cripple the bureau.
This antipathy is nothing new. Republicans opposed the consumer bureau from the moment it was established under the Dodd-Frank financial reform act of 2010 to police unfair, deceptive and abusive practices at banks and other lenders. Their opposition has persisted, even as the bureauâ€™s enforcement actions and investigations have yielded nearly $12 billion in financial relief and restitution for more than 27 million consumers who were wronged in cases involving mortgages, credit cards, debit cards, student loans, payday loans, debt collection and other transactions.
The Choice Act is the biggest attack on Dodd-Frank and the consumer bureau so far. Among other things, it would eliminate the bureauâ€™s examination and enforcement authority for more than half of the banks it currently supervises. It would allow states to block new rules being developed by the bureau to protect against abuses in payday loans and car-title loans.
Similarly, the bill would prevent the bureau from carrying out rules being developed to limit the use of forced arbitration, which disadvantages consumers by denying them the right to sue in disputes over financial contracts. The bill would also stall the bureauâ€™s enforcement of anti-discrimination laws in the auto industry.
The Choice Act would certainly be vetoed by President Obama if it ever got as far as the White House. But it can reasonably be seen as an indication of what a Republican Congress and a Republican White House would do. Donald Trump has said he would repeal the Dodd-Frank law. Even if a new Republican majority did not go quite that far, the very existence of the Choice Act shows how vulnerable the law and the consumer bureau would be.
The financial crisis taught Americans hard lessons about the dangers of a poorly supervised financial system. Without a robust consumer protection bureau, they would be in danger of similar abusive practices in the future.