5 Things the Consumer Financial Protection Bureau Will Do for You
Three bills passed this month in Congressional subcommittees – and slated to be voted on on May 12 by the full House Financial Services committee – would greatly weaken the bureau by limiting its ability to issue meaningful rules, and by placing a bi-partisan committee, instead of a single director, in charge of the CFPB. Still other proposals call for the CFPB, which was created to protect the public against financial abuses, to be eliminated altogether.
"We are dismayed at the proposals on the Hill to weaken the agency before it even gets started," says Jean Ann Fox, director of financial services at Consumer Federation of America. "American consumers need a strong independent CFPB to police credit and payment markets and to put consumer protection first."
Not sure what the CFPB will do for consumers? Here are five things, which translate into five reasons we should all fight for a strong CFPB and tell the politicians to back off from this much-needed watchdog agency.1. Maintain a Toll-Free Consumer Hotline
If you've ever been victimized by unfair credit card fees, ripped off by a mortgage broker or scammed by a payday lender, the Consumer Financial Protection Bureau may be able to help. Starting July 21, 2011 you'll be able to voice your consumer complaints with the agency and file formal reports by calling a toll-free consumer hotline or submitting information online at www.consumerfinance.gov. Until then, you can be referred to other federal agencies for help, or you can check out the wealth of resources about credit counseling agencies, credit card protection, credit reports, debt collection, bank accounts and even budgeting in this section of the CFPB website.
2. Monitor the Marketplace on Your Behalf
The CFPB will also monitor the financial services marketplace and review financial products to help minimize and try to prevent deceptive marketing and predatory lending. The agency's reach will extend to such areas as credit cards, mortgages, payday loans and more. The goal is to make sure these type of companies are being transparent, acting legally and treating customers fairly.
3. Enforce Federal Consumer Financial Laws
In its current format, the Consumer Financial Protection Bureau will have the ability to help enforce federal consumer financial laws – such as the Fair Credit Reporting Act or the Truth in Lending Act – and can penalize companies that fail to comply with those laws.
4. Review Practices of Various Financial Service Providers
The CFPB presently has the power to review a number of practices, ranging from credit card marketing and mortgage lending to credit bureau reporting and high-cost lending (i.e. payday loans and auto title loans). When necessary, the CFPB can step in to force financial institutions to tighten up their business practices if those practices are deemed abusive, unfair or illegal.
5. Function as a Financial Literacy Resource
If you have questions about certain types of consumer financial products and services, you may be able to find the answer you're looking for by visiting www.consumerfinance.gov/protecting-you. This section of the CFPB's website features real stories and provides tips on how to handle various financial dilemmas. In addition to printed materials and videos, the CFPB is also planning special educational outreach efforts to specific groups, including the elderly and members of the military.
Despite the potential benefits to consumers, the CFPB's role in policing financial products is hardly guaranteed.
"Deceptive and abusive mortgage lending – allowed to continue by the existing regulators – was a fundamental cause of the financial crisis, and of the worst recession since the Great Depression," says Lisa Donner, executive director of Americans for Financial Reform, a coalition of more than 250 state and national organizations. "In response, Congress created the consumer bureau, so we will have a cop on the beat with fair play and the public interest as its first priority."
Unfortunately, 44 U.S. Senators have signed a letter to President Barack Obama declaring that they will not support any nominee as director of the new CFPB unless the agency is dramatically weakened. "These 44 Senators," Donner says, "are essentially declaring that they want to keep the CFPB from doing its job: standing up for consumers in the financial marketplace."