CFPB Rollbacks: Payday Lending
The Consumer Financial Protection Bureau (CFPB) was created as the Federal agency with the sole purpose of acting as a watchdog for all consumers and to provide financial protections from unfair and at times illegal business practices. The CFPB is currently being undone from the inside.
Since the inception of the Consumer Financial Protection Bureau (CFPB), the agency has been under attack to remove its power of oversight, and mission to protect consumers across all income levels from corporate harm.
In its short life, the CFPB has been the only Federal agency, to hold a favorable opinion from the general public. The CFPB has held corporations accountable through enforcement actions and recovered funds for millions of Americans.
Although the CFPB is a Federal agency, its structure and the work it does can be changed and weakened by Congress.
To have a strong CFPB that works on behalf of consumers instead of business, we need to continue pushing for the following:
1. Return to its original mission: under new leadership, the CFPB has failed to fulfill its core mission of protecting consumers, and has instead taken actions that seek to reduce the burden on business at the expense of consumers, and has outright neglected to enforce the law and its own rules.
a. The CFPB, under Director Kathy Kraninger (and previously Pres. Trump appointed Acting Director Mick Mulvaney), proposed to rollback its own rule enacted in 2017 that requires payday lender to determine a borrower’s ability to repay before approving the payday loan. Rolling back this rule removes protections against the payday lending debt trap, which are to go into effect later this year.
b. The CFPB should enforce its own rules and protect consumers from predatory lending and should move to adopt a national usury law. A 36% interest rate cap is part of the Military Lending Act, which protects active service members from predatory loans and usury interest rates and would protect all Americans.
2. Maintaining independence: the Dodd-Frank Act, which created the CFPB, gave it independence from Congress and other regulatory agencies so that it could be effective. Independence must also be maintained in its funding. The funding of the agency must be kept away from Congressional appropriations.
a. Independence from Congress and other Federal agencies and departments allows the CFPB to act in the best interest of consumers without pressure from other business-focused regulatory agencies.
b. Changing how the Consumer Financial Protection Bureau is funded would subject the agency to the political impulses of Congress, with the ability to reduce funding of the CFPB to $0 through Congressional appropriations.
3. Retain the original structure: The CFPB must maintain its original structure with a single Director at the head of the agency.
a. A single director removes stalemates in decision making at the top. Changing the structure for one director to three directors makes rule-making more difficult and would make the agency less effective.
The Consumer Financial Protection Bureau, as originally created, intended and designed protects consumers. Keeping the CFPB as the agency that consumers can depend on to safeguard their financial interests is in the best interest of all of us.
Stay connected as we’re working on a social media campaign with our national advocacy coalition partners to bring awareness to the need to safeguard the CFPB and to return it to its original mission.