Dismantling the CFPB

By: Nash Bowen, 1L

Staff Writer

Former Harvard Law School professor and current Senator Elizabeth Warren came up with the Consumer Financial Protection Bureau in response to the economic crash of 2008. In light of Warren’s idea, the CFPB was created under the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010. Congress delegated the power to regulate and reform the methods that consumers are able to utilize in order to attain protection and seek justice against large industries to the CFPB.

A majority of Congressional Republicans have desired to dismantle the CFPB since its creation. This is at odds with the average consumer. With the election of President Trump, many Americans fear that he will dismantle the CFPB, thereby allowing Wall Street industries to use any tactics necessary to increase their profits. In early March, the Trump administration signaled that it planned to fire Cordray, the CFB director, with the ultimate goal of dismantling the Dodd-Frank Act in entirety.

Richard Cordray is the first CFPB director.

https://consumerfinance.gov| Richard Cordray is the first CFPB director.

A federal case was opened to decide whether President Trump has the power to fire Cordray at-will. The Dodd-Frank Act states that he may only be fired for reasons defined as “inefficiency, negligent of duty or malfeasance.” The Justice Department added its opinion to the ongoing case, consistent with the United States Court of Appeals ruling, stating that President Trump does indeed have the power to fire Cordray.

Professor Joshua Fairfield is an expert in many areas of law and business. He regularly consults with U.S. government agencies. On the current situation, he explains, “Congress put the CFPB in place to stop the kind of things that threaten our entire economy. So even someone who thinks that there’s too much consumer protection should realize that this isn’t even about consumer protection, it’s about the fundamental soundness of the economic structure.” When asked about Trump’s chances on dismantling the CFPB he opined, ” I will give you an example of something that I am very concerned about: a lot of lawyers think that our access to courts is simply a given, but the Supreme Court has consistently enforced agreements to keep consumers out of courts. The NY Times exposé laid out that only 6 of nearly 60 million Sprint customers got into consumer arbitration over a 5 year period, and most who get in lose. The most important thing the CFPB was doing was telling banks that they had to give customers the ability to get into court. So now the problem isn’t just that the consumers will get defrauded, but they wont be able to get to court, and now courts will say that there’s nothing they can do about it.

The reason companies include arbitration agreements in their contracts is not because it’s cheaper. In many cases, it’s because the Supreme Court has said that they can use the arbitration agreements to block class arbitration; as long as they nickel and dime consumers for less than the cost of hiring an attorney to bring an incredibly expensive lawsuit, then they can get away with it….It’s pretty vile.” He continued, “One of the bright spots on the horizon was the attempt to put that out of what was okay for consumer financial transaction. The CFPB is one of the few with the heft to be able to do this. If the CFPB pulls back from its rules, then it will be very bad for consumers whether or not it actually undermines any specific statutory regime. It becomes a license to fraud.”

It is clear from Professor Fairfield’s analysis that the potential dismantling of the CFPB could bring about the return of many problems and loss of protection for US consumers. The public interest requires the CFPB remain in tact.

 

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