Minnesota officials divided over the prospects for the beleaguered federal consumer agency – tech2.org

Minnesota officials divided over the prospects for the beleaguered federal consumer agency



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WASHINGTON – The victory of the White House in a power struggle to control the Consumer Financial Protection Office, an agency that is supposed to prevent average citizens from being exploited by banks, credit card companies and others lenders, will resonate in every state in the union.

Depending on the advocates you believe, the appointment by President Donald Trump of Mick Mulvaney as interim director of the office could mean that Minnesota residents can expect complaints from an industry-friendly director who once referred to CFPB as a bad joke. Or it could mean that Minnesotans will work with a more just and efficient agency that no longer drafts its own rules and applies a broad and aggressive approach to all financial institutions.

"CFPB has developed a very effective consumer response system," said Prentiss Cox, who teaches consumer law at the University of Minnesota. "The companies know that if they do not respond, CFPB can see more closely what happens in the company … But the political opposition has been relentless since the day he was born [the bureau].

The CFPB was created with huge Independence from political interference to take advantage of one of the nation's most powerful lobbies, the financial services industry.The office budget is guaranteed through the Federal Reserve, outside of the common funds of Congress.

] But critics believe the deal is not working well Republicans in Congress have offered dozens of bills to change CFPB's governance and funding in order to have more control over an entity that does not respond to anyone.

Joe Witt, CEO of the Minnesota Bankers Association, said that CFPB needs to adapt to adapt to banks of different sizes, for example, what is needed in New York City might not be Needed in Thief River Falls, Minnesota. The office should punish bad actors without penalizing banks that did not do anything wrong by placing expensive privacy regulations at all banks after a small percentage of data, Witt said. In general, he added, CFPB needs to show exactly how consumers benefit from their actions.

"The Obama administration did not do any of that," Witt said. "We are hopeful that the new administration will regulate banks more effectively."

Outgoing director Richard Cordray was free to act without the approval of Congress on many issues. He did so, writing and implementing rules that, since July 2011, according to a CFPB spokesperson, delivered approximately $ 3.9 billion in money returned to consumers, $ 7.9 billion in "capital reductions, canceled debts and other consumer relief. "and $ 473 million in" consumer "As a result of the supervision activity, an additional $ 600 million has been allocated.

CFPB's enforcement efforts have included actions against student lenders and large banks, such as JPMorgan Chase, Wells Fargo and Minnesota, based in Minnesota. US Bank In a high profile example, the office fined Wells Fargo $ 100 million for creating millions of false customer accounts.

Last week, the CFPB public complaints database listed 10,561 complaints from Minnesota consumers. . The number increased from 8,427 in May. Groups like the Minnesota Board on Aging routinely use CFPB brochures as educational resources to teach fraud prevention and occasionally refer clients to the CFPB complaint resolution process.

Minnesota Attorney General Lori Swanson, a Democrat, said she has worked closely with CFPB on many issues. "Culture is more important than organization," Swanson said. "He wants to be an aggressive watchdog."

CFPB generally occupies a prominent place in public opinion polls.

Now, Trump hopes to appoint a permanent director who can be fired at any time and for any reason. Meanwhile, the anti-regulation bias of the Trump administration could affect the way Mulvaney does his interim work. Mulvaney has imposed a 30-day hiring freeze, but says he will not "set fire" to the CFPB.

Rep. Tom Emmer, R-Minn., Is a co-sponsor or sponsor of 17 bills designed to change the way in which the consumer's watchdog operates. Among others, Emmer signed a bill that sought the president to eliminate the director of CFPB "with or without cause" and take away the ability of the department to control "the risks to consumers with respect to consumer financial products or services" . [19659002] "They went through all kinds of rules and got these huge settlements," Emmer said. "They were told they had no jurisdiction over car loans, but they did it anyway, they were told they had no jurisdiction over student loans and they did it anyway, we are trying to hold them accountable, CFPB would be much more suitable for a role of law enforcement, "let other regulatory agencies write consumer protection rules.

Republican representatives Erik Paulsen and Jason Lewis did not respond to requests for comment.

Former Attorney General and State of Minnesota Senator Hubert H. Humphrey III was one of the first employees in the CFPB. As deputy director for the financial protection of older Americans, he worked closely with financial institutions. They were cooperative, he said, but companies that once had their way in most consumer businesses had to "get used to large transfers of supervisory capacity."

Humphrey, a Democrat, believes that the office has represented consumers splendidly. "The screams you hear [from critics] are because they represented consumers so well," he said. He is afraid that the Trump administration will change that. "Energy," he said, "seems to be undoing things or doing nothing [to address misbehavior in the financial industry]."

Sen. Amy Klobuchar, D-Minn., Said that having "someone who has publicly disparaged the agency that runs the office is a mistake that could eliminate [a] a crucial control of our financial system."

Among the ideas floated to govern the CFPB is the appointment of several commissioners representing different points of view. Cox said that would make the consumer agency less vulnerable to the political whims of the White House or the majority party in the Senate and House. But it could also cause stagnation or lack of will to face individual cases, which is the situation in agencies like the Federal Trade Commission (FTC).

"It is important to note that the Office of Consumer Financial Protection will be involved in a prosecutor, while the FTC will not," the Minnesota Board of Aging said in a statement.

Former Minnesota Gov. Tim Pawlenty, a Republican who now heads the business group Round Table Financial Services, believes Cordray's departure allows for necessary adjustments. fact.

"The Trump Administration and Congress should take this opportunity to improve the CFPB by adding a bipartisan council so that key decisions are made in a bipartisan and transparent manner with more than one person involved," Pawlenty said in a statement. the Star Tribune. "Such a change would also eliminate concerns about the constitutionality of the current CFPB structure."

An appeals court is deciding this issue after a mortgage agency imposed a $ 109 million fine on the entity for allegedly making a decision. bribery of mortgage insurers. The accused lender has the support of several financial services groups.

Changing the governance of the office and making the annual office budget of less than $ 650 million subject to congressional approval will make CFPB more responsive to the public, according to Emmer.

He expects the CFPB's new permanent head to be someone who enforces existing laws instead of creating new rules. "This is a bureaucracy that grows faster than weeds in my garden in summer," Emmer said of the current CFPB. "It should protect consumers instead of affecting the markets."

Rep. Keith Ellison, D-Minn., Said that politicizing consumer control will make him vulnerable to elected officials who make the offer of the same financial institutions that the agency is trying to control.

"The citizens of Minnesota and all the other states are going to be worse," Ellison said. "Director Mulvaney is openly hostile to CFPB, he was one of the most vocal critics when it was created."

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