In July 2010, the Consumer Financial Protection Bureau (CFPB) was created by Congress as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The main purpose of creating the Bureau was to increase the efficiency and accountability of our government by consolidating various consumer financial protection authorities that had existed across several different federal agencies into one entity. Consumer financial services had not been the primary focus of any federal agency, and no agency had effective tools to set the rules for and oversee the whole industry. Through regulation and enforcement, the CFPB attempts to protects consumers from financial services companies use of unfair and deceptive practices. Through their enforcement division, they have already returned billions of dollars to harmed consumers. However, during the Trump era, oversight and enforcement at the CFPB both waned. The agency became more sympathetic to the companies it was regulating. This is about to change.
President Joe Biden has nominated Rohit Chopra to serve as director of the CFPB. Chopra is a consumer advocate who is currently serving as a commissioner of the Federal Trade Commission. On February 13, 2021, his nomination was formally submitted to the Senate for confirmation. If confirmed by the Senate, he will replace the acting director, Dave Uejio. Previously, Chopra was assistant director of the CFPB and he even worked on the implementation team that helped launch the agency. The Confirmation of Rohit Chopra will help pivot the CFPB back to its primary job, protecting consumers.
As the head of the CFPB, Chopra will oversee how lenders service a myriad of financial products, from mortgages to credit cards to student loans. He will help manage the winding-down of forbearance programs implemented in the early months of the pandemic. There is also a potential crisis that is looming as the COVID-related foreclosure moratoriums lapse and long periods of loan forbearance end. This is happening at a time where consumer complaints regarding financial companies, such as banks, credit bureaus and debt collectors, are up by more than 50 percent in 2020 according to a new report from the U.S. Public Interest Research Group. More than half of total complaints to the CFPB were against the three major credit reporting agencies, Experian, TransUnion and Equifax. Overall, the number of complaints about credit reporting doubled in 2020, which demonstrates the concern Americans have for improving their credit. The report recommends remedies to both Congress and the CFPB, which can be summarized in three key points:
- Mitigating the financial harms posed by the COVID-19 pandemic;
- Rescinding the actions the Trump administration took to weaken CFPB rules against predatory payday lending and
- Rolling back Trump-era rules that allow debt collectors to harass debtors and other consumers.
While it may seem obvious, the CFPB actually had to announce that it intends to exercise its supervisory and enforcement authority consistent with the full scope of its statutory authority. The CFPB did this when it recently rescinded a policy statement entitled “Statement of Policy Regarding Prohibition on Abusive Acts or Practices” which was inconsistent with the Bureau’s mission. The policy statement was issued during the last days of the Trump administration and sought to cut back on enforcement of acts considered abusive. For example, the policy statement declared that the CFPB would decline to seek civil money penalties and disgorgement for certain abusive acts or practices. The CFPB deters abusive practices and compensates certain harmed consumers by using penalties, so this was contrary to the CFPB’s mission of protecting consumers.
We look forward to having Rohit Chopra confirmed by Congress and the CFPB needs to be put back on course in its mission to protect consumers. At the Law Offices of David I Pankin PC, we have been aiding consumers with debt-related issues for over 25 years. If you have any questions about New York bankruptcy law, please feel free to contact us at 888-529-9600 or simply reply to this email.
You can find out more about the Consumer Financial Protection Bureau here: https://www.consumerfinance.gov/