Summary: The new interim director of the Consumer Financial Protection Bureau (CFPB) has effectively issued a stop work order to staff at the federal government’s only agency designed specifically to look out for American borrowers’ best interests. In an email, staff were instructed to cease all ongoing work on rulemaking, investigations, enforcement, supervision and other activities that they are tasked by Congress with carrying out.
Quotes:
“While it’s hard to predict exactly how this will unfold — the directive is already facing a legal challenge from the National Treasury Employees Union — at least in the short term, this puts a halt to the agency’s work to make sure consumers have adequate protections and to ensure that companies who violate the law have to pay,” says Mallory SoRelle, an assistant professor at the Sanford School of Public Policy at Duke University who researches the politics of credit, debt and consumer financial protection.
“The potential consequences for consumers’ pocketbooks are substantial. Since its inception in 2011, the CFPB’s enforcement actions have put more than $21 billion back in the pockets of over 200 million consumers. Those types of enforcement are now on hold.”
“This directive also puts on hold a popular new rule that was set to go into effect later this spring that would remove medical debt from people’s credit reports. That rule could help more than 15 million Americans see a boost to their credit score, allowing them to get better loan terms (like lower interest rates), rent apartments more easily, and have cheaper insurance, just to name a few benefits.”
“From its inception, the CFPB was designed to protect consumers, making it unique among federal financial regulatory agencies. Historically, U.S. financial regulators were designed primarily to keep banks stable and profitable, rather than to protect consumers.”
“Before the CFPB, the job of enforcing federal consumer financial protection laws was assigned to these agencies whose job and expertise was to prioritize bank profits. That was a significant mismatch, leaving consumers at the mercy of agencies whose primary clients were the banks themselves.”
Bio:
Mallory SoRelle is an assistant professor at the Sanford School of Public Policy at Duke University. Her research and teaching explore how public policies shape reproduce socioeconomic and political inequality in the United States. She focuses primarily on the politics of credit, debt and consumer financial protection. Mallory is the author of “Democracy Declined: the Failed Politics of Consumer Financial Protection.”
For additional comment, contact Mallory SoRelle at:
mallory.sorelle@duke.edu
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Media Contact:
Matt LoJacono
matt.lojacono@duke.edu