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U.S. Opinions: New York

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Consumers get a victory

From an editorial in the New York Times on Monday:

In the deal that broke the filibuster logjam in the Senate, Richard Cordray was confirmed last week as director of the Consumer Financial Protection Bureau – two years after his nomination by President Barack Obama. Republicans had blocked a vote in an attempt to weaken the portion of the Dodd-Frank law that established the bureau. In explaining why 12 of them finally joined 54 Democrats to approve Cordray, Sen. Bob Corker, R-Tenn., told The Wall Street Journal that some Republicans had realized that “maybe” it wasn’t right to hold up a qualified nominee because you don’t like the law.

The agency now can build on its notable accomplishments, including a crackdown on abusive credit card tactics that has refunded more than $400 million to 6 million customers. Other projects, including the regulation of debt collectors, can be ramped up because Cordray’s confirmation removes lingering legal uncertainty over the bureau’s reach. Here are some areas for action:

PAYDAY LOANS: The bureau has issued a report showing how payday loans entrap consumers in endless cycles of high-cost debt. Now it needs to stop the abuses it has identified through bans on deceptive advertising, balloon payments and lending without regard to ability to repay.

OVERDRAFT FEES: Rules are needed to ensure that banks don’t use overdraft protection as a profit center. Overdraft fees on checking accounts need to be reasonable and proportional. And overdraft protection should not be offered at all on ATM, debit and prepaid cards because there is no delay between swiping a card and accessing an account.

MORTGAGES: Recent rules from the bureau to govern lenders’ treatment of troubled borrowers were too weak. Any borrower who qualifies for a loan modification should be offered one. “Dual tracking,” the bank tactic of pursuing foreclosure while evaluating a borrower for new loan terms, should be banned.

ARBITRATION: The bureau should move quickly to ban mandatory arbitration clauses in finance agreements, like those for checking accounts . That would allow consumers to sue, individually or collectively, over unfair or unlawful practices.

Other areas needing scrutiny include reverse mortgages, auto-loan kickbacks and student loan modifications.

The financial industry and congressional Republicans tried to derail the bureau. They did not succeed, in large part because the bureau has been so effective, even under fire. That bodes well for the fights that are sure to come.

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