In response to “‘Financial dictator’ hurting economy” (Robert Pittenger’s April 14 For the Record):
One clear lesson from the financial crisis is that common-sense rules of the road in our financial markets would have prevented the damage. It may seem amazing now that banking regulators would have to pass rules requiring lenders to make sure borrowers could actually repay mortgage loans, but that was the case only seven years ago.
Congress passed the Wall Street Reform Act to address the worst abuses in our financial markets. As part of the Act, Congress created the Consumer Financial Protection Bureau (CFPB) to further protect consumers from abusive lending practices.
The consumer agency has been a terrific success. Started from scratch in 2011, it has returned $12 billion in relief to 29 million Americans harmed by illegal financial practices. This is real money that belongs in consumers’ pockets, not in the coffers of Wall Street banks.
The CFPB has acted against lenders who took advantage of our men and women in uniform, including payday lenders who overcharged them, auto lenders who violated laws protecting our troops when deployed, and for-profit colleges which target military members with useless, exorbitantly expensive degrees.
The consumer agency secured relief for victims of Wells Fargo’s illegal practice of opening unauthorized accounts, and it made credit card companies pay back $3.4 billion to customers tricked into buying add-on products.
At the same time, the CFPB helps consumers resolve disputes with and stop abusive practices by lenders. The agency’s complaint system has fielded over one million consumer complaints and 97 percent of complaints sent to companies get a timely response.
Faced with that record of success, most would argue that we should keep a robust consumer agency like this on the beat. Instead, Rep. Robert Pittenger backs legislation that would all but eliminate the CFPB and let banks and lenders return to the Wild West days before the crisis.
Far from harming the economy, common sense financial protection boosts it. Before Dodd-Frank was signed into law, a largely unregulated financial system caused the economy to hemorrhage millions of jobs. Now, the financial markets are stable and lending levels have grown.
The CFPB is doing a remarkable job protecting family wealth from abusive lending practices, from payday loan debt traps to prepaid card fraud. Instead of getting in the way, Congress should stand with consumers and let the consumer agency continue to do its job.
Kukla is Executive Vice President of the N.C.-based Center for Responsible Lending.