By Beverly Brown Ruggia
Once again, House Republicans have taken up hatchet and torch with the intention of slashing and burning a crucial governmental institution meant to provide protections and safeguards for the wellbeing of all citizens.
The so-called "Choice Act" which, the House Committee on Financial Services Chair, Jeb Hensarling (R-Texas 5th Dist.) is eager to move through committee and to a vote, is to Dodd Frank and the Consumer Financial Protection Bureau (CFPB) what the AHCA is to the Affordable Care Act.
This legislation, which President Trump supports, would tear out the legal roots of the CFPB. If enacted, the bill would burn through the bureau's authority and independence to stop bad actors from breaking the law, leaving Wall Street banks and predatory lenders free to rip off consumers with impunity.
New Jersey is home to two members of the House Committee on Financial Services, Rep. Tom MacArthur (R-3rd Dist.) and Rep. Josh Gottheimer (D-5th Dist.), who are hearing this bill this week, have an obligation to the citizens of New Jersey to stop this bill in its tracks.
This destructive legislation proposed by House Republicans would gut the one entity that is holding Wall Street and financial institutions accountable for unfair, deceptive and abusive practices.
Abuses like those in the allegations against a law firm right here in New Jersey accused of defrauding first responders. Deceptive practices like those revealed in a suit brought just this week by the CFPB against a law firm that does collections in New Jersey for falsely stating in millions of collection letters, that their attorneys were involved in collecting the debt. New Jersey, with the highest percentage of foreclosures in the country for the second year in a row, cannot afford to lose the CFPB reforms that make mortgage loans fairer and simpler, and reduce the risk of default.
The Consumer Financial Protection Bureau (CFPB) was created by the Dodd-Frank Act to bring basic standards of fair play to the world of mortgages, checking accounts, credit cards, credit bureaus, student loans, consumer loans and debt collection. It achieves this mandate through its independent authority in rulemaking, investigation and enforcement action.
Despite relentless attacks from Republicans in Congress since it opened its doors in 2011, the CFPB has managed, to provide $3.7 billion in monetary compensation to consumers, $7.7 billion in principal reductions, cancelled debts, and other forms of relief because of enforcement activity.
The bureau delivered an additional $371 million in consumer relief because of supervisory activity. The Republicans who claim to be the Law and Order party are determined to shut down a government agency that has brought relief to 29 million consumers and threw the book at the offending companies that wronged them.
Among the many gifts to bad actors on Wall Street and rollbacks to consumer finance protections, the Choice Act:
- Eliminates of the CFPB's authority independence
- Opens massive loopholes in the rules put in place to discourage the kind of unaffordable mortgages that were at the heart of the foreclosure crisis
- Repeals of the fiduciary rule, which requires investment advisers to act in the best interest of their clients. This rule alone could prevent Wall Street from siphoning more than $17 billion a year out of the savings of American workers and retirees
- Permits banks to charge more to use a debit card, costing more than $6 billion per year.
If the economic crash of 2008 and high profile cases of abuse since then have taught us anything, it is that the bad players on Wall St and in the financial industry must have constant and strong oversight by an independent agency with enforcement powers. With the leadership of Director Richard Cordray, the Consumer Financial Protection Bureau fulfilled its mandate and served the people of this country well.
The Choice Act is the wrong choice for consumers, for New Jersey and for the economy.
Beverly Brown Ruggia is the Financial Justice Advocate for New Jersey Citizen Action (NJCA), the state's largest progressive coalition working for social and economic justice for all.
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