aside Disputed CFPB Acting Director Is Fighting Back Against The President’s Administration

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I am thrilled that the acting CFPB Director Leandra English is fighting against the republican President Donald Trump’s appointment of the White House’s Budget Director Mick Mulvaney as head of this consumer protection agency. This will be a lengthy court battle but it is an important one. The republicans in the White House and the US Congress want to dismantle this agency with its rules to protect average Joe Americans from the predatory lending practices by financial institutions which were prevalent and which  contributed to the 2008 US recession.

On December 1, 2017, staff at Reuters published the following report, “Disputed CFPB acting director plans to seek preliminary injunction: filing.”

“The disputed acting director of the Consumer Financial Protection Bureau said in a court filing on Friday (12/1/17) that she plans to seek a preliminary injunction against rival acting director Mick Mulvaney and the Trump administration by Dec. 5.”

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SHE’S FIGHTING BACK

“President Donald Trump named Mulvaney, the White House budget director, as acting director of the CFPB on Nov. 24 following the departure of the director, who had named the agency’s deputy director, Leandra English, to temporarily succeed him.”

“A federal judge this week refused to block Trump’s appointment of Mulvaney to lead the consumer watchdog agency, but English is continuing to pursue the issue and indicated in a court filing she would file a motion of preliminary injunction against Mulvaney and the Trump administration by Dec. 5.”

Congress looks to rollback payday lender regulations

As per a 6/2/17 Policy Matters Ohio report by Kalitha Williams, “Since its inception, the CFPB has used its enforcement authority to return nearly $12 billion to 29 million consumers from financial companies that broke to the law. More than 17,000 Ohioans have filed complaints with the agency. The CFPB is working to rein in payday and car-title lenders from engaging in the following abusive, or deceptive practices:”

“The CFPB has worked tirelessly and effectively to protect working families, people with disabilities, and the elderly,” said Linda Cook, Senior Attorney at the Ohio Poverty Law Center. “These citizens are especially vulnerable to the high costs, turnovers and abuses of payday loans. In Ohio, payday loans keep people in a state of perpetual debt and create economic instability in families and communities.”

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The House Financial Services Committee chairman, Representative Jeb Hensarling, Republican of Texas

In addition to providing special protections for payday lenders, the (US Congress would like to remove) the CFPB’s authority to stop other financial services businesses, like credit card companies and mortgage brokers, from pushing abusive products on their customers or tricking them into paying for things they can’t use, don’t want and don’t need.

“They would unravel other important consumer protections including:”

  • Repealing a rule that requires investment advisers to act in the best interest of their clients. The rule would put $17 billion back in the pockets of retirement savers
  • Allowing banks to charge more to use a debit card, costing consumers more than $6 billion per year
  • Stripping agencies of the power to wind down megabanks that are “too big to fail” without bailouts or inflicting widespread harm on the economy
  • Making it easier for companies to win in court when charged with wrongdoing.

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Here’s an example as to how republicans want to roll back consumer protections…

On December 1, 2017, Jim Puzzanghera of the LA Times penned the following report, “House lawmakers move to repeal new CFPB payday lending rules.”

Excerpts:

“A bipartisan group of House lawmakers on Friday introduced legislation to repeal the first broad nationwide regulations on payday and other short-term loans, arguing the rules from the Consumer Financial Protection Bureau would effectively ban millions of Americans from accessing credit.”

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“The move is the latest in a Republican-led fight against the agency, an Obama-era creation that was the center of controversy this week in a legal dispute over who should serve as acting director.”

“The House members hope to duplicate the successful effort this year to use the Congressional Review Act, a formerly little-used mechanism, to repeal a new consumer bureau rule that would have allowed Americans to file class-action suits against banks instead of being forced in many cases into private arbitration.”

“I and my colleagues in Congress cannot stand by while an unaccountable federal agency deprives our constituents of a lifeline in times of need, all while usurping state authority,” said Rep. Dennis Ross (R-Fla.), the sponsor of the resolution to repeal the payday loan rules.”

“The regulations were unveiled in October by bureau director Richard Cordray, whose resignation last week set off the succession battle.”

“President Trump installed Mick Mulvaney, the White House budget director, in the job. Cordray had appointed Leandra English to be deputy director, and she filed suit saying she was lawfully entitled to the position.”

“A federal judge ruled in Mulvaney’s favor on Tuesday (11/28/17) in the first of what’s expected to be a lengthy legal fight.”

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“The centerpiece of the new payday rules, which are not scheduled to take effect until mid-2019, is a full-payment test that lenders would be required to conduct to make sure the borrower could afford to pay off the loan and still meet basic living expenses and major financial obligations.”

“The rules also would limit the number of payday and auto-title loans that could be made in quick succession to an individual borrower to three. There are no caps on interest rates.”

“Cordray said lenders used short-term loans to trap cash-strapped Americans in a high-interest cycle of debt and that nationwide restrictions were needed on the $38.5-billion-a-year payday lending industry.”

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“The loans typically are cash advances on a worker’s paycheck for two to four weeks and carry a flat 15% fee or an interest rate that doesn’t seem particularly high. But the effective annual interest rate is actually 300% or more and costs can quickly add up if the loan isn’t paid off, the bureau said.”

“Consumer advocates and most Democrats in Congress strongly back the rules.”

“But the payday industry and most Republicans oppose the regulations.”

“The Community Financial Services Assn. of America said payday loans are used by about 19 million households to meet budget shortfalls or unexpected expenses. The majority of users have annual incomes between $25,000 and $50,000.”

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“The group said that the typical fee for a $100 payday loan is less than the penalty for bouncing a $100 check.”

“Ross’ bill is cosponsored by Reps. Alcee Hastings (D-Fla.), Tom Graves (R-Ga.), Henry Cuellar (D-Texas), Steve Stivers (R-Ohio) and Collin Peterson (D-Minn.).”

“Allied Progress, a consumer watchdog group, said the six lawmakers have received $471,725 in contributions from the payday lending industry during their congressional careers.”

“Make no mistake, this industry will do whatever it takes to keep their predatory racket humming along,” said Karl Frisch, the group’s executive director.”

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“The resolution is likely to pass the Republican-controlled House. Rep. Jeb Hensarling (R-Texas), the powerful chairman of the House Financial Services committee and a leading critic of the bureau, said Friday that he supported the repeal.”

“But the effort might face trouble in the Senate. The resolution needs only a simple majority to pass, but the arbitration rule repeal required Vice President Mike Pence to break a 50-50 tie.”

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