Consumer protection bureau up and running

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The long awaited Consumer Financial Protection Bureau officially opened its doors on Thursday, although without a confirmed director and with potentially diminished powers as a result of a House of Representatives bill to weaken the agency (HR 1315).

“Today, on the very day that the new Consumer Financial Protection Bureau took over as the nation’s first consumer cop on the beat to protect Americans from deceptive and unfair practices of the financial services industry, the U.S. House of Representatives voted to cripple it,” said consumer program director Ed Mierzwinski, of the National Association of State Public Interest Groups, which has offices in Buffalo and Syracuse.  

The CFPB still faces a struggle in Congress, but the results of a mid-July survey conducted for AARP by Lake Research Partners indicate that an overwhelming majority of Americans in both parties support the creation of a single agency with the sole mission of safeguarding the public from deceptive financial practices and predatory products.

“The bureau now has things that it’s doing to protect the public,” Mierzwinski said. “That and the president’s supportive comments and his nomination of [Richard] Cordray means I’m confident we can defeat those in Congress and the Wall Street banks who oppose it.”

The bureau’s first order of business is handling credit card complaints. Complaint forms may be filled out and submitted on CFPB’s website at www.consumerfinance.gov. According to the agency, “[t]he central mission of the CFPB is to make markets for consumer financial products and services work for Americans — whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products.”

Howard Dvorkin, head of the credit counseling organization Consolidated Credit Counseling Services Inc., with offices in Rochester, said consumers should become familiar with what the CFPB can do for them and his credit counselors will do their best to keep clients informed about the new agency’s power to help them. Dvorkin said CFPB will require lenders to provide consumers with their credit score if they are denied credit.

“This vital piece of information will help people make better choices and lead to an understanding of their own credit situation,” he said.

Dvorkin, however, said he sees both sides of the issue.

“I am a consumer advocate and I want to see consumers protected,” Dvorkin said. “The CFPB will help prevent consumers from being taken advantage of and help prevent financial scams and deceptive practices but at the same time I understand both sides.

“I think the idea behind it is good and it will be a good thing at the end of the day but the business part of me thinks that it is clearly a duplication of bureaucracy in Washington,” he added. “The thing that deeply concerns me is its $400 million self-funded budget.”

Dvorkin said he was also concerned that the new agency took the best people out of other agencies such as the Federal Trade Commission, the FDIC and others.

Alternatively, Empire Justice Center senior attorney Ruhi Maker said a single federal agency that “stands up for the whole country” is what consumers need since effective regulation in all 50 states is impossible.

“The CFPB will look at the patterns and practices of companies that take advantage of small consumers,” Maker said.