By Shay M. Farley, JD
Legal Director, Alabama Appleseed Center for Law & Justice, Inc.
This month marks the fifth anniversary of the law that created the only financial regulatory agency with a mandate to put the interests of consumers first. Since it opened its doors in July 2011, the Consumer Financial Protection Bureau has begun to bring badly needed rules of fair play to mortgages, debit cards and other areas of the financial marketplace, while delivering some $5.5 billion in refunds and restitution to more than 14 million consumers cheated by financial companies big and small.
Now the Bureau has taken the first steps toward issuing rules that could end abuses in payday, car-title, and other high-cost, debt-trap consumer loans – loans that have had devastating effects on countless Alabama families. Unfortunately for the citizens of Alabama, however, Senator Shelby appears to be lining up with the payday lenders and the big banks in their ceaseless efforts to block regulation and undermine the Consumer Bureau’s effectiveness.
Senator Shelby has voted for bills and amendments designed to curtail the CFPBs funding and authority and roll back financial reform. In addition, as chairman of the Senate Banking Committee said in January, “I’ll be doing everything I can to if not repeal—which I’d like—but modify Dodd-Frank.” According to Phil Angelides (head of the financial crisis inquiry commission), Sen. Shelby’s “Financial Regulatory Improvement Act” is “another episode in the constant effort by Wall Street to roll back some of the key protections that were put in place after the financial meltdown of 2008.”
Poll after poll show that most voters – including majorities of Democrats, Independents and Republicans – believe there should be more, not less, government oversight of financial companies. Nearly nine out of ten voters say that small-dollar lenders should have to make sure a loan is affordable in light of a customer’s income and expenses. These results are highlighted by the bipartisan support for state legislation to cap the interest rates on payday and auto title loans.
Deceptive loans, fueled by the greed of lending companies and Wall Street banks, nearly drove our economy off a cliff in 2008. Some of our elected leaders may have forgotten that; their constituents have not. Most Americans understand that the kind of abuses the Consumer Financial Protection Bureau has set out to tackle put our whole economy at risk.
The Bureau released an outline of its plans to regulate small-dollar consumer loans in March, and it is expected to come out with a formal proposal later this year. Meanwhile, it has been working with the Justice Department and other federal agencies to crack down on payday lenders, debt collectors and their corporate accomplices (including banks and payment processors) when they violate existing state and federal laws.
We often critique governmental programs for being redundant and wasteful. In its short existence, the Consumer Financial Protection Bureau has proved its worth.
It is a big win that we now have an agency with a mission to put consumer protection first. We must urge Senator Shelby and all our elected officials to start supporting instead of undermining its crucial work.