Why Delaware must fight for the Consumer Financial Protection Bureau
“The purse & the sword ought never to get into the same hands.”
– George Mason, Records of the Federal Convention of 1787
More than 12 years ago, American consumers gained some crucial safeguards against unfair and predatory financial practices, saving thousands and thousands of your neighbors in Delaware from financial peril.
Starting this week, all of those protections are at risk of disappearing. Their fate will soon rest with the U.S. Supreme Court, which will hear oral arguments in the case Community Financial Services Association of America Ltd. v. Consumer Financial Protection Bureau. The case concerns whether the CFPB’s funding mechanism violates the Appropriations Clause of the U.S. Constitution. If such a violation is found, the CFPB may lose its independent regulatory authority and its ability to implement and enforce consumer protection laws — laws that for years have helped ensure all consumers have access to financial products that are fair, transparent and competitive.
The CFPB grew out of the U.S. Congress’s response to financial industry behavior that led to the Great Recession of 2007-2008, and its aim was to make the U.S. financial system safer and fairer for consumers and taxpayers. And it worked: The Bureau’s Payday Lending Rule helped rein in predatory payday, vehicle title, and certain high-cost installment loans. For anyone ever surprised by a late or overdraft fee, or who has received harassing collection phone calls, or become ensnared in predatory loan schema, this rule has proven to be fair in form, equitably enforced, and surely beneficial.
In contemporary America, and here in Delaware, low-wealth wage earners have historically had no power and scant resources to access an inequitable financial system. The CFPB has been an unprecedented lifeline, helping many Delawareans keep money that is rightfully theirs, and which others seek to take. Since December 2011, the CFPB resolved 20,754 complaints — most related to credit reports, reporting agencies, debt collection and mortgages.
But the dispute over the bureau’s funding now puts its entire body of work at risk. And it’s not just the CFPB at stake: According to the Consumer Federation of America, activities funded by Congress outside of the annual appropriations process could also be subject to this decision. Those include agencies, programs and services as wide-ranging as the Federal Reserve, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the National Credit Union Administration, the Farm Credit Insurance Corporation, and Federal Prison Industries, along with Medicare, Medicaid, Social Security, the Affordable Care Act, unemployment benefits, child nutrition assistance and more.
Our media remind us daily of the realities of life that tear at the fabric of a civilized society. Numerous federal programs that exist to aid those in need of help hang in the balance with the outcome of this litigation. To sit by and do nothing as the sword of Damocles hangs over the heads of the Executive and Legislative branches of our government is not an option.
We hope that a well-funded effort by private philanthropists such as the Bill and Melinda Gates Foundation, the Ford Foundation, and the Bloomberg Philanthropies (to name a few) can reveal the intricacies of low-wealth lending practices from application through final payment. With such support (and it will be a significant financial commitment), we cannot only begin to understand better methods and practices for serving the needs of the low-wealth community, but we can do so until CFPB’s inevitable rising from ashes, if need be.
DCRAC already has the framework to be the crucible for testing new ways of giving the low-wealth community access to a fair financial system. We need to be able to continue this crucial work, because we have seen its success: By integrating legal and financial access with community education and advocacy, DCRAC and the CFPB help ensure that our low-wealth clients can secure and manage their own financial futures and thrive within mainstream banking and legal systems.
Our work even has the potential to help unravel other social issues: With the data generated by our financial support systems, society gains the crucial knowledge needed to scientifically address such issues as student loans, housing, medical care, and many other modern American dilemmas.
These are issues that affect all of us — our brothers and sisters, our neighbors and friends. These are times when their future is more uncertain than ever, and the fate of our least fortunate neighbors is now acutely at risk. We can protect that future if we act, and the time to act is now. Time is of the essence, for the sake of us all.
Rashmi Rangan, Esq., is executive director of the Delaware Community Reinvestment Action Council, Inc.
James S. Angus, Esq., is a volunteer attorney for the Delaware Community Reinvestment Action Council, Inc.
This article originally appeared on NorthJersey.com: Consumer Financial Protection Bureau: Delaware must protect it
