US President Donald Trump is facing immense pressure to get rid of America’s consumer protection agency CFPB (Consumer Financial Protection Bureau). This is according to the man set to head the agency. If this happens, rogue debt collectors, loan sharks, and payday lenders will have unmatched freedom to rip off American borrowers.
According to Randy Neugebauer who is slated to replace the current CFPB Director, President Trump is facing immense pressure from the Republican Party to break up the agency completely. The former Texas congressman held talks with the then President-Elect Trump shortly after his election victory in November.
While speaking to The Independent exclusively in his 1st interview since the new Trump administration took office, Mr. Neugebauer stated that his meetings with President Trump have involved discussions revolving around deregulating as well as gutting the CFPB.
Mr. Neugebauer went ahead to state that some of his colleagues are in favour of doing away with the agency completely. He is however of the opinion that it’s better to change certain aspects of the agency as opposed to doing away with the agency completely. Mr. Neugebauer feels that the government shouldn’t be telling the public what types of financial products are the best but rather, creating a safe environment where the public is safe from unfair lending practices.
This is where the CFPB comes in. The agency has the power to take any necessary action against companies which break the law. The agency also takes on cases revolving around race or age discrimination.
Under Mr. Neugebauer’s watch, the agency’s current form is likely to be dismantled which may result in the agency losing much of its influence. Mr. Neugebauer claims that American consumers are currently being suffocated by regulations. He prefers a consumer environment where consumers have the freedom to choose the loans they want whether the deals available are good or bad.
Mr. Neugebauer has stated that he is willing run the agency if appointed. However, it will depend on what the long-term plan of the agency will be. Although Mr. Neugebauer admits to having had broad discussions with President Trump, he goes ahead to state that he hasn’t discussed any specific job offer with the president.
Mr. Neugebauer has been on the record voicing his support for payday loan lenders, despite the apparent lack of transparency as well as crippling interest rate charges that have contributed to calls for payday lenders to be banned.
He also backs President Trump’s executive order aimed at reviewing the 2010 Dodd-Frank financial regulations. Mr. Neugebauer states that the Obama administration rules meant to get rid of risky lending practices were an overreaction. Mr. Neugebauer views the current regulation as blanket regulation meant for the whole financial market yet some entities weren’t part of the cause of the financial crisis that warranted the 2010 Dodd-Frank financial regulations. In his opinion and those of many others, the regulation went too far.
Under the current CPFB director Richard Cordray, customers who have been victims of credit scams or unfair banking sector practices have received billions in compensation. However, Mr. Neugebauer claims that the problem was overstated and individual states were doing a better job when compared to the CPFB.
He admits to the fact that there are people who will always try to abuse the system, however, action can and has been taken against such people.
Furthermore, the CFPB is already under threat given the federal appeals court ruling in October that the agency has an unconstitutional structure. The ruling also gave President Trump the power to dismiss the current director at will and appoint his replacement anytime even before his term ends in 2018.
The agency which came into being after the 2010 Dodd-Frank reform law was enacted is among former President Obama’s main domestic policy achievements. The achievement is, however, unpopular with libertarians who think it has resulted in unplanned long-term commitments that shifts from the initial objective. Most libertarians feel the agency should either be reformed or disbanded.
A bill has already been introduced by Representative John Ratcliffe and Senator Ted Cruz to disband the agency. If the bill is passed prompting the disbandment of the CFPB, the move will be hugely controversial. Many banking sector players have warned against such a move claiming it will do more harm than good.