D.C. Circuit Court Decision Is a Victory for Consumers

By Renato Rocha, Policy Analyst, Economic Policy Project, NCLR

Yesterday, the United States Court of Appeals for the D.C. Circuit agreed to rehear a case, PHH Corp. vs. CFPB, that would have seriously weakened the efficacy of the Consumer Financial Protection Bureau (CFPB).

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Last October, a three-judge panel attempted to make it easier to remove the director of the consumer agency, allowing the president to fire the director at will. The full federal appeals court decided that it will revisit the issue at a hearing in May, effectively scrapping this earlier decision, and allowing the CFPB’s structure to continue as Congress intended.

The D.C. Circuit Court’s decision is important, because a challenge to the Bureau’s structure and director’s authority is an attack on American consumers.

Photo: Mike Mozart

Since the CFPB opened its doors in 2011, it’s become clear that a single director who can push back on big banks and stand up for the ‘little guy’ is exactly what consumers need, and voters overwhelming support the Bureau’s work. A 2016 poll found that three-in-four voters support tougher rules to address the unscrupulous practices that caused the financial crisis. The CFPB is one of the safeguards that was put in place to protect the U.S. economy and Americans from another financial crisis, and the agency has been doing its job well.

In December 2016, the CFPB reported that in the agency’s five years under Director Richard Cordray they returned nearly $12 billion in relief to 29 million consumers. Among this relief were dozens of actions where financial institutions gave consumers products they didn’t ask for, restricted access to products, or fraudulently charged people more for products, such charging servicemembers millions of dollars in hidden fees.

Specifically, for minority consumers, the CFPB has returned more than $400 million to 1.4 million people who were victims of practices that discriminated against communities of color. The CFPB’s actions have protected millions of Americans from deceptive financial practices, including Latinos, many of whom have been discriminated against in the financial marketplace. Additionally, not only has the CFPB protected consumers from deceptive financial practices, it has put money back in their pockets.

The CFPB has been instrumental in curbing the predatory lending practices of payday lenders.

Despite CFPB’s effective work on behalf of families, opponents of consumer protection have attacked the agency every step of the way by repeatedly proposing legislation and filing court cases to roll back protections. Efforts to remove Director Cordray before his term expires in PHH Corp. vs. CFPB is just one attempt to challenge the CFPB’s critical work and put our country at risk of another financial crisis.

Other legislative threats include: Congressional Republicans’ efforts to replace the single-director structure with an ineffective commission, shrink the workforce of the agency, make the agency dependent on annual congressional appropriations, and eliminate its consumer complaint database. Each and everyone one of these proposals would cripple the CFPB’s ability to preserve opportunities for Latino families, and all Americans, to maintain financial security and build wealth.

In the coming months, we look forward to a D.C. Circuit Court ruling that keeps the CFPB structure intact, and we will work vigorously to oppose any Congressional attempts to weaken the Bureau. Our country needs an independent CFPB that has all the tools at its disposal to make financial markets fairer and more transparent. American consumers, especially communities of color, need a federal agency that will stand up for them now more than ever.

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