For the last two months or so, since July 21, the new Consumer Financial Protection Bureau, or CFPB – a centerpiece of the 2010 Wall Street Reform and Consumer Protection Act — has been up and running. It’s the nation’s first federal financial regulator with only job—protecting consumers, including servicemembers, from unfair financial practices.
So why did Holly Petraeus, who runs the CFPB Office of Servicemember Affairs, recently write in the New York Times that servicemembers and veterans are still being “exploited by unscrupulous for-profit colleges?” The schools, which use high-pressure sales tactics to recruit students and load them up with high-cost debt to pay for dubious educational programs, are supposed to be regulated by the CFPB. So are payday lenders, mortgage companies and other “non-banks,” as well as banks.
But the CFPB doesn’t gain its full authority over for-profit schools or payday lenders until a director is confirmed by the U.S. Senate. Unfortunately, at the behest of Wall Street, 44 Republican Senators, led by Richard Shelby (R-AL), wrote the President in May and told him that they would block confirmation of any director forever unless the CFPB is first torn down and rebuilt the way the big banks want it– weak and powerless and with a tin cup in hand.
These 44 Senators include Maine Senators Collins and Snowe. Worse, Collins also is a sponsor of S. 737, to weaken the CFPB. The threat is real. The House has already passed legislation to weaken the CFPB.
So, our military are in harm’s way right here at home due to politics. It shouldn’t be that way. Veterans and current servicemembers have long been targeted by private student lenders, payday lenders, rent-to-own-stores, auto-title-pawn shops and others of their ilk. Numerous commanders have testified that bad credit has harmed security clearances, military unit morale and unit preparedness.
Earlier this year, for example, JP Morgan Chase Bank apologized and paid civil penalties for illegal foreclosures on servicemembers. Holly Petraeus, a consumer expert and wife of General David Petraeus, is the CFPB’s voice on military families’ behalf in the financial marketplace, but until the CFPB gets a director, she cannot do much more to protect them, unless they are harmed by a big bank.
On July 18, the President nominated former Ohio Attorney General Richard Cordray, the current enforcement chief of the Bureau, as the CFPB’s first director. On September 6, the Senate Banking Committee held his nomination hearing and is expected to vote on the nomination soon. Cordray has already received strong support from Ohio papers and praise from the current Republican Attorney General of Ohio, Mike DeWine, who had defeated him. Even many Ohio bankers have commended the nomination.
The failure of the current bank regulators to stop predatory lending and other reckless Wall Street practices is widely recognized as a primary cause of the 2008 mortgage meltdown that caused the loss of millions of homes, millions of jobs and trillions of dollars in lost retirement income and triggered the current recession.
In response, Congress established the CFPB as part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. Many consumer advocates and experts consider it the most significant consumer financial protection since deposit insurance was created after the 1929 Great Crash. Its mission is to use research, regulation, education, and enforcement to protect all consumers in the financial marketplace. Congress gave the CFPB special responsibilities to protect older Americans, servicemembers, and students.
The choice for Maine Senators is clear. Confirm the president’s well-qualified nominee to head the new Consumer Financial Protection Bureau (CFPB). Otherwise, the CFPB cannot do its job. That leaves military families, veterans and the rest of us at the mercy of unscrupulous lenders, whether banks, for-profit schools, mortgage companies or payday lenders.
Written for this newspaper by Ilya Slavinski, Federal Field Associate with USPIRG.