Student Loan Watchdog Quits, Says Trump ‘Turned Its Back’ On Borrowers

From today’s NPR News:

The federal official in charge of protecting student borrowers from predatory lending practices has stepped down.

In a scathing resignation letter, Seth Frotman, who until now was the student loan ombudsman at the Consumer Financial Protection Bureau, says current leadership “has turned its back on young people and their financial futures.” The letter was addressed to Mick Mulvaney, the bureau’s acting director.

In the letter, obtained by NPR, Frotman accuses Mulvaney and the Trump administration of undermining the CFPB and its ability to protect student borrowers.

“Unfortunately, under your leadership, the Bureau has abandoned the very consumers it is tasked by Congress with protecting,” it read. “Instead, you have used the Bureau to serve the wishes of the most powerful financial companies in America.”

The letter raises serious questions about the federal government’s willingness to oversee the $1.5 trillion student loan industry and to protect student borrowers.

Read the complete article here.

Senators urge CFPB not to ‘abandon’ duty to protect troops, families

From today’s Military Times:

In the wake of reports that a key federal consumer protection agency is considering pulling back from efforts to protect service members from predatory lenders, 49 senators have signed a letter asking for a commitment that the bureau will continue to ensure troops are protected.

The Consumer Financial Protection Bureau “should not be abandoning its duty to protect our service members and their families” the senators wrote in a Wednesday letter to Mick Mulvaney, director of the Office of Management and Budget, and acting director of the Consumer Financial Protection Bureau. The lawmakers — all 48 Senate Democrats and independent Vermont Sen. Bernie Sanders — asked for a commitment that the CFPB will use “all of the authorities available to the CFPB to ensure that service members and their families continue to receive all of their [Military Lending Act] protections.”

Rather than actively examining lenders’ records to determine whether they are following the law under the Military Lending Act, several sources say the CFPB instead would rely on complaints from service members and their families to trigger potential investigations. CFPB officials reportedly have expressed a concern that they don’t have the authority to conduct these lender examinations, although they have been doing so for years.

According to the CFPB, their enforcement actions have resulted in about $130 million that has been provided in relief to service members, veterans and their families.

The possible change was first reported in the New York Times. The move wouldn’t change the law itself, only the enforcement techniques. In the past, some lenders have expressed concern to Military Times about what they perceived as aggressive and unfair practices by the CFPB.

Read the complete article here.

56 years later, JFK’s call for a consumer bill of rights is forgotten under Trump

From the Los Angeles Times:

On this day in 1962, President Kennedy laid out in a speech to Congress the framework for a consumer bill of rights and the crucial role the federal government must play in protecting those rights.

Kennedy’s call to arms is now marked every March 15 as World Consumer Rights Day, which seeks to advance “guidelines for consumer protection”backed by the United Nations.

Yet over half a century later, the current occupant of the Oval Office, President Trump, a wealthy businessman, is aggressively pursuing policies that undermine each of Kennedy’s declared rights.

So it’s worthwhile asking: Is it too late to change course? Have corporate interests prevailed?

Read the complete article here.

CFPB to reconsider rule on payday loans

From CNN Money Edition:

The watchdog agency said in a statement Tuesday that it intends to “reconsider” a regulation, issued in October, that would have required payday lenders to vet whether borrower can pay back their loans. It also would have restricted some loan practices.

If the rule is thrown out or rewritten, it would mark a major shift for an agency that had zealously pursued new limits on banks and creditors before Mick Mulvaney, President Trump’s budget director, became the CFPB’s acting director.

Mulvaney took over the top job at the CFPB in November following a leadership scramble. A vocal critic of the CFPB when it was run by President Obama appointee Richard Cordray, Mulvaney since said the agency would cut back on burdensome regulations.

Tuesday’s announcement does not amount to a formal repeal of the payday lending rule. But it does cast doubt on whether it will ultimately be implemented.

Payday loans provide those in need with small amounts of cash — typically between $200 and $1,000. The money needs to be paid back in full when a borrower receives his or her next paycheck, and such loans often come with exorbitantly high interest rates.

Consumer advocates that have supported the CFPB’s restrictions on the loans say such transactions often take advantage of people in desperate financial situations.

“The CFPB thoroughly and thoughtfully considered every aspect of this issue over the course of several years,” Karl Frisch, executive director of progressive group Allied Progress, said in a statement. “There is no reason to delay implementation of this rule — unless you are more concerned with the needs of payday lenders than you are with the interests of the consumers these financial bottom-feeders prey upon.”

The sentiment was echoed in a statement by Sen. Elizabeth Warren, a Democrat who helped create the CFPB.

“Payday lenders spent $63,000 helping Mick Mulvaney get elected to Congress and now their investment is paying off many times over. By scrapping this rule, Mulvaney will allow his campaign donors to continue to generate massive fees peddling some of the most abusive financial products in existence,” Warren said.

Read the complete article here.

Bad news for American consumer rights, as CFPB director announces departure

Richard Cordray, the head of Consumer Financial Protection Bureau, is stepping down at the end of the month. The bureau was created in the wake of the financial crisis and has recovered $12 billion from financial firms on behalf of consumers, but Republicans have fought Cordray and the bureau, claiming its very existence is illegal and that it has harmed consumers by stifling lending.

Listen to the NPR Roundtable discussion about his announcement, and what it means for American consumers here.

Federal consumer protection agency announces reform agenda for 2014

From the New York Times by Tara Siegel Bernard:

The Consumer Financial Protection Bureau, which has already overcome considerable political resistance, has managed to pack some punches in the last few months on behalf of the purchasing public it represents.

In December, the agency ordered refunds by major companies for misleading business practices: American Express, more than $59 million; GE Capital Retail Bank, up to $34 million. A joint settlement with Ocwen Financial totaled about $2 billion. The list goes on.

And on Friday, new mortgage rules and consumer protections went into effect that were part of the financial overhaul bill that created the agency, which opened its doors just over two years ago.

Yes, there’s a new sheriff in town. But the true test of the consumer watchdog’s mettle will be in the year ahead, when the agency is set to take on several thorny issues that are likely to draw more resistance from the financial services lobby and give more impetus to Republican opponents in Congress who continue to try to reduce the bureau’s power. As recently as November, a House committee passed several bills to do just that.

(The agency’s new director, Richard Cordray, whose confirmation was being blocked by Republicans, was finally confirmed in July, two years after his appointment by President Obama.)

Consumer advocates say they will be watching several big issues closely, including something called forced arbitration, which amounts to waiving the right to sue in some kinds of cases, as well as debt collection and overdraft charges.

The consumer agency has already begun studying all of these areas, but how far it will go remains to be seen. Several consumer advocates, consumer law experts and others have weighed in on what they would like to see the agency accomplish in the year ahead on these issues and others: Arbitration, Overdraft Fees, Debt Collection, Student Loans, and Credit Report Disputes.

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