financial reform

President’s Recess Appointment Gives Watchdog Teeth It Needs To Protect Consumers From Wall Street Financial Shenanigans

By Edmund Mierzwinski and Alana Miller

Kudos to President Obama for standing up for consumers this week by making a recess appointment of former Ohio Attorney General Richard Cordray to head the new Consumer Financial Protection Bureau. The President’s action means that the CFPB now has all its powers to protect the public from unfair financial practices, whether by banks or other financial firms, such as payday lenders and credit bureaus.

Since July 21, the CFPB – a centerpiece of the 2010 Wall Street Reform and Consumer Protection Act – had been up and running, but only with partial powers. It is the nation’s first federal financial regulator with only one job – protecting consumers, including seniors, students and servicemembers, from unfair financial practices.

Now with a director in place, the CFPB has additional abilities that kick in, including the right to supervise payday lenders, mortgage companies, credit bureaus, debt collectors, private student lenders and other non-banks. It also now has additional powers over banks and credit card companies.

Along with civil rights, labor, senior and consumer groups, PennPIRG had long urged the Senate to confirm Cordray, the former Ohio Attorney General, to direct the CFPB. Recently, 37 state Attorneys General, on a bi-partisan basis, had sent a letter to the Senate urging confirmation.

Yet, at the behest of both the Wall Street banks and the payday lenders, some Senators had opposed confirmation of any CFPB director. 45 Senators, including Pennsylvania’s own Senator Toomey, had written the President in May and told him that they would block confirmation of any director until and unless the CFPB’s independence and authority were first restricted. Then, on December 8th, 45 Senators blocked Cordray’s nomination. They wanted the CFPB weak and powerless and with a tin cup in hand.

If our political leaders REALLY want to help small business…..

It seems like almost every other word we hear from our political leaders is about the need to support small businesses to get the economy back on track. As small business owners, there’s one simple thing that could be done that would provide almost immediate help.

Small business owners have big troubles with big banks and credit cards and the new Consumer Financial Protection Bureau (CFPB) should take a look at the numerous obstacles.

First, banks don't like smaller accounts. Many of us face hassles even receiving business lines of credit. Often, we rely on our personal cards to fund our small businesses.

But when we face fraud problems or billing disputes related to those business uses, the banks say that the consumer protection laws don't always apply. Even consumer groups say it's a gray area. And where we have rights, we have to fight with the banks, which, as you might imagine, does not often lead to a result in our favor.

For those of us who do qualify for business credit cards, the cards have no consumer protections under the law. Banks can raise our interest rate at any time for any reason, or for no reason at all. Banks can lower our credit limit at any time, even to amounts below our current balance. There are no restrictions on penalty fees. When we are victims of fraud or billing errors we have no right under the Truth In Lending Law.

Consumers gained important new protections in the Credit CARD Act of 2009. In response, some credit card companies have been accused of marketing business cards to consumers and then denying those consumers their rights because they have business cards, not consumer cards.

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