Will the Consumer Financial Protection Bureau Lose its Power?

According to a recent article in The New York Times, the Trump administration has “called for the neutering of many of the central provisions of the Dodd-Frank Act,” which could result in the Consumer Financial Protection Bureau (CFPB) losing much of the power it currently has to prevent abusive debt collection practices, and to provide other consumer protection measures. Specifically, the Treasury Department recently released a report that contended the CFPB has engaged in “regulatory overreach” and that its director should be removed. What else was in this report, and what is the future of the CFPB under the Trump administration?
Treasury Department Seeks to Roll Back Consumer Protections Under Dodd-Frank
What are some of the specific ways in which the Treasury Department wants to roll back consumer protections and the role of the CFPB? Most immediately, as the article clarifies, the Treasury Department report “recommended greater exemptions from the so-called Volcker Rule, which bans banks from trading for their own gain.” In addition, the report asked that rules for community banks be revised so that they are not under as much regulatory scrutiny from the CFPB.
The regulations that are currently in place have been extremely beneficial to consumers. Those regulations helped to bring us out of the financial crisis, and to provide consumers with protection from deceptive lending and debt collection practices. The Dodd-Frank Wall Street Reform and Consumer Protection Act, which authorized much of the regulatory power of the CFPB when it was signed into law in 2010, aims to prevent unscrupulous lending practices that can harm consumers. The recent report suggests that there is more interest within the current administration in easing regulatory burdens than ensuring consumer protection.
Relation Between Dodd-Frank “Roll Back,” the CFPB, and the Financial Choice Act
As the article underscores, “the Trump administration cannot roll back the law,” meaning Dodd-Frank, “on its own.” At the same time, however, the administration does have “broad authority to determine how its rules are executed.” In other words, the administration cannot simply undo Dodd-Frank, but it may be able to change some of the fundamental ways in which the law works and the ways in which the CFPB carries out its consumer protection goals. The Treasury report pushes for various ways of “scaling back” the power of the CFPB.
Less than a week before the Treasury Department report, in pushing for the easing of regulations, the House of Representatives passed the Financial Choice Act. This proposed legislation, if it were to pass as-is in the Senate, would have tremendous impact on consumers in Oak Park and throughout the country. It would do the following:
  • Exempt certain financial institutions from risk-taking restrictions in Dodd-Frank; and
  • Replace Dodd-Frank’s orderly liquidation authority with a new bankruptcy code provision.
As the Financial Choice Act currently stands, analysts expect it will not pass in the Senate. However, it suggests that the CFPB could be at risk. With such risk, consumers could lose significant protections against unfair and deceptive lending practices, as well as fraudulent debt collection practices.
Discuss Your Options with an Oak Park Consumer Protection Attorney
If you have been the victim of unfair or deceptive lending practices, you may be able to file a claim. You should discuss your options with a consumer protection lawyer in Oak Park as soon as possible. Contact the Emerson Law Firm to speak with a dedicated advocate about your case.
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