Consumer protection bureau faces challenges

By Todd Etshman
Posted: 1:22 am Wed, May 4, 2011

Victims of deceptive financial loans and products thought they finally had some federal protection with the creation of the Consumer Financial Protection Bureau pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The CFPB would be the first federal agency created to protect American consumers from financial abuses. It is set to begin its work to maintain and police fair rules for consumer financing on July 21.  

However, a House of Representatives Financial Services subcommittee meets today to discuss several bills that would weaken the CGPB before it even gets started.

“This isn’t about reasonable congressional oversight,” said consumer advocate Ed Mierzwinski of the National Association of State Public Interest Research Groups, which has offices in Buffalo and Syracuse.

“Thousands of consumers have been waiting for the first federal agency to protect consumers such as senior citizens, working families, military members etc. I’m appalled that Congress would try to defang this,” he said in a conference call for the media sponsored by Americans for Financial Reform, a coalition that includes Empire Justice Center in Rochester.

The conference call included stories from victims of predatory lenders nationwide.

“There are many cases like theirs in Rochester,” said Empire Justice Center senior attorney Ruhi Maker. “If I’m from a working family spending money on abusive fees, its money I don’t have to spend on groceries, school books or in a Rochester neighborhood.”

Maker said the CFPB is needed to look at the pattern and practices of companies that take advantage of consumers who aren’t likely to hire an attorney to get their money back.

“You could never have effective regulation in all 50 states,” she said. “They just move on. We need a federal agency that stands up for the whole country.”

New Yorkers for Responsible Lending, a statewide coalition including Empire Justice Center, sent a letter to New York’s congressional representatives  Tuesday asking them to oppose attempts to weaken the CFPB.

“NYRL members have seen up close the devastating effect that unregulated financial services abuses have had on New York communities and families,” the coalition said in the letter. “The lack of regulatory accountability has led to devastating levels of foreclosure and debt, high unemployment, and great economic insecurity for a huge segment of the public. It is critical that the financial services industry finally be held accountable by federal regulators.”

Rochester resident Theodore Jordan, a local pastor, wanted to participate in the AFR conference call but was unable to attend. Jordan took the case of an elderly relative on Social Security to Empire Justice Center attorneys to help her overcome a default action filed by a credit card company.

“This senior citizen did not know how to deal with the credit card organization,” Jordan said. “We set up payment arrangements but they changed the post office box without notice, put us in default and stopped responding to phone calls.

“I definitely think the CFPB is needed because the under represented need assistance,” he continued. “If we didn’t have help, they could have taken her assets.”

Although Empire Justice Center was able to help Jordan’s relative, it’s the kind of problem CFPB was created to assist.  

“We can’t represent hundreds of thousands of similarly situated clients,” Maker said. “The CFPB will look at the patterns and practices of companies that take advantage of small consumers like this.”

Treasury secretary advisor and Harvard Law professor Elizabeth Warren has been charged with setting up the bureau, which has been under attack by House Republicans. Warren said that in 2007, Americans get better federal protection when they buy a toaster than when they get a mortgage.