SCOTUS could upend consumer financial protection as we know it

From today’s CNBC News Online:

A case before the Supreme Court has the power dramatically to reshape how the U.S. government polices financial fraud and other misdeeds against consumers — which many experts fear would weaken existing protections and expose the public to more harm.

The case, which concerns the Consumer Financial Protection Bureau, ultimately could lead to the dissolution of the agency, which lawmakers created in the wake of the 2008 financial crisis and was bestowed with broad powers to issue and enforce consumer-protection rules in areas such as banking, student loans, credit reporting, mortgages, payday loans and debt collection.

Depending on their verdict, Supreme Court justices could also diminish states’ power to investigate and punish financial wrongdoing.

“It would be effectively a big rollback in the consumer protection enforcement authorities,” said Christopher Peterson, the director of financial services and a senior fellow at the Consumer Federation of America, a consumer advocacy group. “There would be fewer deterrents [for financial institutions] to use tricks and traps” to ensnare the American public, he said.

Congress created the Consumer Financial Protection Bureau in 2010 when it passed the Dodd-Frank financial-reform law, giving it a mission to protect Americans from unfair, deceptive and abusive financial practices. At the time, families were grappling with the effects of the worst financial crisis since the Great Depression, perpetuated by irresponsible lending practices that reverberated across the U.S. and global economies.

Oversight of consumer finance was previously “scattered across government” and laws “escaped regular federal oversight,” according to the CFPB website. The CFPB has collected billions of dollars in penalties from financial companies for wrongdoing. Its largest, for $2.13 billion in 2013, was levied against mortgage servicing firm Ocwen Financial Corp. and a subsidiary for allegedly putting thousands of people at risk for losing their homes.

The agency has recovered more than $12 billion for consumers to date, according to a Consumer Federation of America report published in March last year. The agency’s activity has dropped off under the Trump administration, the report says.

Read the complete article here.