The controversial Consumer Financial Protection Bureau (CFPB), which was launched in July 2011 from the equally controversial Dodd-Frank Wall Street Reform and Consumer Protection Act, is nearing its fifth birthday.
In slightly less than five years, the Bureau has handed out more than $5 billion in fines to companies who they deemed have violated federal consumer financial protection laws. A large chunk of that has been handed out to financial firms for violations in the mortgage servicing space; in December 2013, the Bureau ordered Ocwen Financial, the nation’s largest non-bank servicer, to pay $2 billion in consumer relief to underwater borrowers for alleged servicing errors that pushed borrowers into foreclosure.
Whether you think the CFPB is meting out justice and protecting consumers from abusive financial practices or if the Bureau is the one that is actually inflicting the abuse generally depends on what side of the fence you’re on.
If you’re on the Democratic side, you are probably among those who see the Bureau as a triumph for all that is good in the world of protecting consumers. In March 2015, House Financial Services Committee Ranking Member Maxine Waters (D-California) told the committee, “Mr. Chairman (Jeb Hensarling, R-Texas), your party pretends to care about the huge challenges of income inequality and minority access to credit, vilifying this agency as 'hurting the very people we are trying to help.”
In November, presidential hopeful Hillary Clinton tweeted, “The CFPB protects borrowers from unfair and deceptive Wall Street practices. Attacks against it are unfounded and outrageous.” Also in November, Sen. Elizabeth Warren (D-Massachusetts), the Bureau’s chief architect, tweeted, “So here’s my message to Wall Street and their GOP buddies: We’re ready to fight back to protect the CFPB.”
If you’re on the Republican side, chances are you see the CFPB as an overreaching government bureaucracy with a lack of transparency and accountability. Both of the aforementioned Clinton and Warren tweets were sent in response to a TV commercial that ran during the nationally-televised GOP debate. The ad was sponsored by the American Action Network, a right-leaning Washington, D.C.-based advocacy group, and it painted the CFPB as a communist organization that even included a backdrop of gigantic red-shaded banners of CFPB Director Richard Cordray and Warren.
Since the Bureau opened its doors, Republicans have asserted that the Bureau’s overreach has caused increased compliance costs to businesses, which has in turn resulted in costlier financial products for consumers. Critics of the Bureau say this process harms the very consumers it aims to protect.
Last week in a House Financial Services Committee hearing in which Cordray testified, Hensarling told the committee that “Congress has made Mr. Cordray a dictator.”
“Apologists for the Bureau, along with Mr. Cordray, frequently cite the tens of millions of dollars of fines they have imposed as proof they are protecting consumers,” Hensarling said. “But the Bureau operates as legislature cop on the beat, prosecutor, judge and jury all rolled into one. Fines imposed in such an abusive structure tell us nothing about justice or consumer welfare. Nothing.”
Republicans have introduced several bills in an attempt to reform the CFPB, notably by Rep. Sean Duffy (R-Wisconsin) and Randy Neugebauer (R-Texas), but none have made any headway.
Should a Republican be elected president, what will be the future of the CFPB? Will it continue as is, or will the president make wholesale changes?