It’s been a sad couple of weeks for consumers.
Your elected officials are taking steps that will gut protections for everyday Americans.
We know many of you favor smaller government, less regulation and freeing the hands of companies to make profit.
But recent moves in the House of Representatives defy common sense for consumers.
How can anyone support action that will put consumers at a disadvantage against large corporations, those with unethical lending practices and sometimes, plain trickery.
The attack on your protections is coming from several different directions.
Here’s what’s on the line:
1. The Consumer Financial Protection Bureau (CFPB).
The CFPB was created in the wake of the 2008 financial crisis with a mandate to “protect consumers from unfair, deceptive, or abusive practices and take action against companies that break the law.”
CFPB has gotten $12 billion in restitution for consumers who were wronged in just five years.
Sounds like a win for everyone except the bad guys.
But the House Financial Services Committee decided otherwise.
It approved the Financial CHOICE Act, which stands for Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs.
The bill basically takes away most of the CFPB’s authority and enforcement powers and gives “hope” and “opportunity” to disreputable banks that have been on the run.
The CHOICE Act would neuter the CFPB by eliminating its ability to fine law-breaking companies. It would no longer be able to order companies to provide refunds to wronged consumers.
“It’s not enough to shackle the bureau,” said Lisa Donner, executive director of the non-partisan consumer advocacy group Americans for Financial Reform. “They also stab it and behead it.”
The bill would also change how the agency is funded. Right now, CFPB gets its funding through the Federal Reserve, but under the CHOICE Act, it would become part of Congress’ appropriations process. That means politics will come into play when it’s time to decide funding. And that means pressure from lobbyists could impact the decisions made by legislators who get contributions from companies targeted by CFPB.
Donner said the bill includes some very specific items CFPB could no longer regulate, including payday lenders and car title lenders.
Big banks, too, would no longer be CFPB’s responsibility.
“It’s the end of the supervision that caught Wells Fargo systematically opening fraudulent accounts for consumers,” Donner said.
Those who support knee-capping the CFPB have argued it has too much power.
Too much power to protect consumers by making sure financial companies follow the rules? Sheesh.
The bill next moves to a vote in the full House, and with passage, on to the Senate.
2. The fiduciary rule
Anyone can hang out a shingle and call themselves a financial advisor.
There’s been nothing stopping unethical advisors from trying to sell clients inappropriate investments that earned the biggest commissions for the advisor.
A Department of Labor (DOL) rule, known as the fiduciary rule, was set to change that.
It would require investment advisors to put the interests of their clients before their own interests. The move would save investors more than $17 billion a year, DOL said.
Those who oppose the rule, which came to be after years of debate, hearings and compromise, have been trying to kill it.
The most recent assaults came shortly after President Donald Trump took office when the rule’s effective date was delayed. Now part of the rule is scheduled to be enacted in June and the rest early next year.
But those who oppose the rule are still trying to kill it. Eliminating the rule was attached to the most recent budget, but that didn’t work, so now, it’s part of the CHOICE Act.
3. The Regulatory Accountability Act
The Trump administration has promised to cut back on regulations.
The Regulatory Accountability Act, passed in the House in January, makes it harder for agencies to create new ones.
Donner calls it a “stealth attack,” saying that while it’s not so bad in name, the innards are terrible.
“It would essentially make it impossible for the regulatory agencies to write rules to protect the public interest, and that’s true in banking protections from payday lenders, debt collectors, banks opening fake accounts,” Donner said. “It would also make it impossible for the regulators to write rules that seek to prevent another financial crisis.”
It would impact everything from workplace safety to clean air and water to financial protections and safe toys for our kids.
The bill offers a series of new steps for rule-making, and it also gives companies and industries more influence and methods to fight rules they wouldn’t like.
“They have lobbyists, they spend money on campaigns, they give money to academics and experts to write papers,” Donner said. “The playing field is already tilted their way and it’s an uphill battle to make sure the public interest is represented.”
Donner said while supporters of the act say overregulation is a burden and too costly for business, they’re not acknowledging the cost of not regulating business, such as the 2008 financial crisis.
“The rest of us still haven’t recovered, and that was a cost of a failure to regulate,” she said.
WHAT YOU CAN DO
As a consumer, if you want to protect your rights — and reduce the chance you’ll ever need to ask Bamboozled for help with a consumer problem — you need to make yourself heard.
Start by calling your senators to tell them what you think of the legislation. Find out how your representative voted. Call them, too. You can find that information here.
And if you want to get more involved, contact the many consumer advocacy groups who are against the bills to see how you can help. You can find more on that here.
Email your questions to Ask@NJMoneyHelp.com.
Karin Price Mueller writes the Bamboozled column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com’s weekly e-newsletter.