And the rest of us, too
by Philip Mattera, director of the Corporate
Research Project for the Dirt Diggers Digest
Bessent’s first act was to order a halt to all activities at
the CFPB, including rulemaking and enforcement. He issued a statement saying:
“I look forward to working with the CFPB to advance President Trump’s agenda to
lower costs for the American people and accelerate economic growth.”
Translation: I will slash regulation and perpetuate the myth that reduced
oversight works to the benefit of consumers.
The firing of Chopra and freezing of CFPB activities come as welcome news to major financial institutions and fly-by-night operators, both of which have sought to neutralize the agency ever since it began operation in 2011.
The agency was also a frequent target of criticism from Congressional Republicans, who hated the fact that the law creating the CFPB provided that the director could only be removed for cause. In 2020 the conservative majority of the Supreme Court threw out that provision, meaning that the director could be removed at will by the President.
As shown in Violation Tracker, the CFPB
has over its life collected more than $17 billion in fines and settlements,
much of which has gone to affected consumers in the form of restitution. The
cases, numbering more than 250, have involved a wide range of financial
misconduct, from the Wells Fargo bogus account scandal to the deceptive
practices of for-profit colleges.
Let’s focus on one subset of cases in which the CFPB has been especially active: cases brought against lenders that prey on military families. The agency has collected more than $146 million in penalties in a dozen such cases. A big share of that total comes from a $92 million settlement reached in 2014 with Colfax Capital and Culver Capital, also known as Rome Finance.
The case,
brought in cooperation with 13 state attorneys general, accused Rome Finance of
luring servicemembers with the promise of instant financing on expensive
electronics but then masked the finance charges with inflated prices in
marketing materials and later withheld key information on monthly bills.
Richard Cordray, CFPB’s director at the time, stated: “Rome Finance’s business model was
built on fleecing servicemembers.”
In 2023 the CFPB found that TMX Finance, known as TitleMax, violated the Military Lending Act by extending prohibited title loans to military families, often charging nearly three times more than the 36% annual interest rate cap.
The agency said TitleMax tried to hide its unlawful
activities by, among other things, altering the personal information of
military borrowers to circumvent their protected status. The CFPB also found
that TitleMax increased loan payments for borrowers by charging unlawful fees.
The agency ordered the company to pay more than $5 million in consumer relief
and a $10 million civil money penalty.
Large financial institutions have also been called out by
the CFPB for cheating military families. U.S. Bank and one of its nonbank
partner companies, Dealers’ Financial Services, were required
to return about $6.5 million to servicemembers for failing to properly disclose
all the fees charged to participants in the companies’ Military Installment
Loans and Educational Services auto loans program, and for misrepresenting the
true cost and coverage of add-on products financed along with the auto loans.
Those who would eliminate or defang the CFPB—especially
those who take every opportunity to express their support for the troops–should
be made to made to acknowledge that their actions will make military families,
as well as millions of others, more vulnerable to financial predators.
