The Consumer Financial Protection Bureau (CFPB) was created in 2010 to “making consumer financial markets work for consumers, responsible suppliers and the economy as a whole. Yet the Bureau has imposed rule after rule that hurts consumers and the middle class in particular. Here are five ways the CFPB could get you in financial trouble:
- If you had trouble getting a mortgage from your bank, it may be because of the CFPB Qualifying Mortgage Rules (QM). The QM rule empowers trial lawyers and makes it incredibly easy for borrowers to sue banks not only for fraud and deception, but also for overestimating the borrower. “the ability to pay,“ an inherently subjective standard. It also prohibits even small adjustments on a mortgage.‘interest rates. As a result of these new costs and liabilities, many smaller banks and credit unions simply stopped issuing new mortgages. Responsible middle-income borrowers suffer from the lack of available mortgages that the rules have created. Part of this is the fault of the Dodd-Frank statute, but it was the CFPB that refused to exempt many rural and small banks and credit unions, as required by law.
- It is to do low dollar short term loans very difficult to obtain. Anyone in a tight financial situation knows that there will come a time when you need quick access to cash. Financial responsibility requires that you pay a bill on time, even if you have to borrow to do so. Of course, many people in limited circumstances have low credit scores and may not have a credit card, so they are forced to look for short-term loans like payday loans or securities loans. vehicles. Yet the CFPB seeks to kill these industries on the specious grounds that they harm their consumers. As our author Hilary Miller found earlier this year, academic research on the effects of payday loans suggests that there are no ill effects and may be beneficial. If you can’t get a short-term loan and pay a bill, the consequences can be devastating – yet the bureau believes it is protecting consumers by effectively banning them. Worse yet, the rule will actually make it difficult for credit unions to offer loans to pay off payday loans!
- The Bureau wants you to prosecute people you disagree with rather than engage low cost arbitration. Bringing someone to court in a business dispute can be very costly and time consuming for both parties. This is why throughout history, customers, suppliers and other parties to agreements have linked themselves to the decisions of private arbitration services – George Washington even put an arbitration clause in his will. Congress recognized the essential role that arbitration plays in the Federal Arbitration Act in 1925. Yet the CFPB wants to ban the use of binding arbitration services in financial contracts. This will increase the costs of financial companies and, consequently, the costs for middle class consumers – many of whom will no longer be able to afford the services as a result. By forcing consumers to use the court system, most likely as part of a class action lawsuit led by trial lawyers, these middle class consumers will also experience delays in their access to grievance redress – a class action lawsuit. takes an average of three years to come. a settlement while arbitration takes a little less than 7 months.
- New rules for prepaid products could harm innovative payment methods like Venmo. Anyone with college-aged kids knows that the fastest way to get them cash when they need it is Venmo or some other payment app. Many middle-class workers these days also receive their paychecks by prepaid card, which takes the hassle out of owning a bank account – you don’t have to wait for your paycheck to clear, for example. example. Yet the CFPB is once again concerned that some people do not understand the terms and conditions of prepaid products and payment systems and therefore imposed an 800 page rule that obliges disclosures in terms such as font size. – which makes no sense for an online application. like Venmo. Once again, the rule will only add up costs to financial firms and therefore reduce the quantity and scope of products available to them, which will hurt consumers who use those products.
- The Bureau compiles massive amounts of data, violating your privacy – and he wants to share some data even with foreign governments. As former Speaker of the House, Newt Gingrich wrote last year in The Wall Street Journal, “Each month, the CFPB… collects data on 22 million mortgages, 5.5 million student loans, two million bank accounts with overdraft fees, and hundreds of thousands of auto sales, odds. credit and advances on deposits. ” This database was critical by the Government Accountability Office for potential security risks and failing to adequately protect consumers’ financial data. In addition, a recent regulation entitled “Proposed changes regarding disclosure of documents and information,” has come under fire of the United States Civil Liberties Union as imposing prior restrictions on speech. The same rule would also allow the Bureau to share the surveillance information it has collected with other regulatory bodies such as state attorneys general and even foreign governments, which would allow unwarranted fishing expeditions, although they are explicitly prohibited from doing so in the Dodd-Frank Act.
CFPB unjustified and offensive sound exercise unconstitutional the power should hopefully end soon. The new president must do what he does best and Fire Department Director Richard Cordray. The middle class will thank him – and their paperbacks too.