“Instead of taking bold action to protect consumers, the CFPB under your leadership has used this pandemic as an opportunity to protect big banks, payday lenders, debt collectors, and other corporate interests.”
The Consumer Financial Protection Bureau, which was mandated after the 2008 recession to regulate loans and financial products and protect consumers from unscrupulous lending practices, has recently come under fire for actions taken under the banner of providing relief during the pandemic. This week, Sen. Sherrod Brown of Ohio and other Democratic members of the Senate Banking Committee sent a sharply worded letter voicing their opposition to the body’s handling of coronavirus-related issues.
Recent rollbacks to consumer protections include encouraging banks to offer micro-loans with unrestricted interest rates, thereby opening the door for predatory payday loans. And on April 1, the CFPB announced they would no longer punish companies that failed to meet deadlines under the Fair Credit Reporting Act, under the guise of “flexibility” for staffing shortages due to the outbreak.
“In the face of this pandemic, the CFPB is needed now more than ever to protect and mitigate the financial harm being inflicted on American families,” Brown, along with Sens. Brian Schatz, Chris Van Hollen, Elizabeth Warren and Jack Reed, wrote to Kathleen Kraninger, director of the CFPB. “Instead of taking bold action to protect consumers, the CFPB under your leadership has used this pandemic as an opportunity to protect big banks, payday lenders, debt collectors, and other corporate interests.”
Richard Cordray, the former director of the CFPB who was appointed under President Obama, also took issue, publishing a public white paper that laid out a specific plan of action and suggested next steps to mitigate harm to consumers during the pandemic. Cordray criticized the CFPB’s focus on easing regulation for lenders as opposed to easing the burden for millions of Americans.
In the paper Cordray penned with several former colleagues, he said the CFPB needs to prioritize learning what consumers need right now. It should also act immediately to prevent mass evictions and foreclosures, and monitor lenders’ progress in providing foreclosure relief that was paid for in the $2 trillion coronavirus aid package.
“The economic crisis emerging in this country creates enormous and unavoidable problems and risks for many consumers,” Cordray wrote. “It is in difficult times that strong consumer protections are needed the most. The CFPB is well positioned to make a difference for large numbers of Americans, but it must confront the circumstances and act immediately to mitigate the harmful effects of this crisis.”