Consumers Union urges lawmakers to reject Financial CHOICE Act
House of Representatives to vote Thursday on bill that weakens the CFPB and leaves consumers vulnerable to financial fraud and rip-offs
WASHINGTON, D.C. – Consumers Union, the policy and mobilization division of Consumer Reports, urged the House of Representatives in a letter today to reject the Financial CHOICE Act (HR 10), a bill that would seriously limit the ability of the Consumer Financial Protection Bureau (CFPB) to stand up for consumers and challenge unfair and abusive financial practices. The House is expected to vote on HR 10 on Thursday.
The CFPB was established as part of the measures passed by Congress in the wake of the 2008 financial crisis. It works to ensure consumers are treated fairly by establishing basic standards that banks and other financial companies must follow and by policing abuses in the marketplace. Since the CFPB opened its doors in 2011, it has won almost $12 billion in refunds and relief for an estimated 29 million Americans who’ve been defrauded by financial companies.
“Our country learned the hard way how lax consumer protections can have severe consequences for hardworking families and our economy,” said Pamela Banks, senior counsel for Consumers Union. “This bill turns the clock backwards on financial industry oversight by gutting the CFPB and would leave Americans vulnerable to financial fraud and rip-offs. We can’t afford to take the financial cop off the beat and roll back the critical reforms adopted to protect our wallets. It’s the wrong choice for consumers and should be rejected by Congress.”
Under HR 10, sponsored by Representative Jeb Hensarling (TX), the CFPB would lose its power to supervise and examine big banks and stop them from engaging in unfair, deceptive, and abusive practices. Instead, the bill would divide this authority among a number of different federal banking regulators that have historically been slow to take action to protect consumers, according to Consumers Union. Before the 2008 financial crisis, consumer advocates had warned that risky mortgage lending was putting homebuyers at risk of default. The failure of federal regulators to act quickly and effectively to protect consumers from unaffordable mortgage lending led to a record number of foreclosures that helped trigger the country’s deep recession.
The CFPB has used its authority to challenge unfair, deceptive, and abusive practices in a number of its enforcement actions, including last year when it fined Wells Fargo $100 million for opening over two million unauthorized bank and credit card accounts.
HR 10 would weaken the ability of the CFPB to protect consumers in a number of other ways, including:
- Limiting the CFPB’s authority over nonbank financial companies like credit reporting agencies, debt collectors, student loan servicers, and auto finance lenders
- Stopping the CFPB from using its rulemaking and enforcement authority to protect consumers from unfair payday loans, car title loans and other small dollar loans, which trap many borrowers in a cycle of debt
- Repealing the CFPB’s authority to limit the use of forced arbitration in financial service contracts
- Weakening the CFPB’s authority to conduct financial education campaigns by making the office of community affairs discretionary and doing away with the CFPB’s public complaint database
- Undermining the CFPB’s independence by allowing the President to fire the CFPB’s director at will, unlike other banking regulators
- Subjecting the CFPB’s budget to the congressional appropriations process, opening it up to further attack by those determined to shrink its budget