Improving Americans' Financial Security: The Importance of a CFPB Director

摘要

A little over a year ago, the President overcame the fierce lobbying from the financial industry and signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act. The new law put in place reforms that reduce excessive risk-taking on Wall Street, as well as protections that encourage a strong, stable financial system that can support sustained economic growth. The Act also established the strongest consumer protections in our history, for the first time charging one agency-the Consumer Financial Protection Bureau (CFPB)-with the responsibility of protecting and educating Americans who use financial products. Implementation of Wall Street Reform and the stand-up of the CFPB have already started transforming our financial system and benefiting consumers by ensuring that financial service providers compete on the basis of the services they provide and not on hidden fees or other harmful practices. However, one of the most important components of Wall Street reform is putting in place a Director of the new CFPB. It is only with a Director that the CFPB can exercise its full authorities and make good on the consumer protection goals of Wall Street Reform. Without a Director, the CFPB cannot fully supervise1 non-bank financial institutions such as independent payday lenders, non-bank mortgage lenders, non-bank mortgage servicers, debt collectors, credit reporting agencies and private student lenders. Without a Director, Americans will not be protected from falling prey to many of the harmful practices that contributed to the worst financial crisis since the Great Depression. This report outlines the role that these non-bank actors have in affecting the lives of typical American families. It documents the degree to which middle class families rely on non-bank financial institutions; highlights some of the harmful, non-transparent practices that consumers could fall victim to in these markets; and explains that these practices will continue to exist without comprehensive federal oversight as long as the CFPB lacks a Director.