We all knew that with Trump in office and the Congress in full Republican control, the GOP would be going after consumer protections from all sorts of angles, but the contents of the memo give a sense of just how nasty their plans are.
For all those Trump supporters who thought their hero was going to “save the middle class,” sorry kiddies. Better put your money under the mattress.
….Hensarling (R-Texas) is strengthening his attack on the Consumer Financial Protection Bureau and scaling back regulations on living wills and bank stress tests in new legislation expected to be introduced soon...with some of the biggest changes directed at the CFPB.
The bill would turn the head of the consumer watchdog agency into a political appointee who can be dismissed at will rather than the director of an independent agency, the memo states. The previous bill called for a five-member commission to lead the CFPB.
According to the memo, the bill would strip the agency of its authority to bring cases against financial institutions under a provision known as unfair, deceptive and abusive practices and eliminate databases of consumer complaints. (Emphasis mine)
(NOTE: The Living Wills reference is a proposed change to requirements that banks create a document detailing what they would do if their institution went belly up.)
In fighting for creation of CFPB, Senator Elizabeth Warren won an important point. It would be financed outside the regular budget process. She knew that once it was created, if it was subject to annual budgets, the GOP would treat it like they have the SEC, FCC, IRS and other agencies….cut staff and resources to weaken their effectiveness. Changing the leadership of the agency to a political appointee subject to dismissal at will pretty much achieve the same end since a compliant Trump will have little interest in this position or its importance. His choice of cabinet members from the business community makes that patently clear.
This latest news comes on the heels of Trump administration announcements that they will be attacking provisions of Dodd-Frank, the legislation created in the wake of the 2008 market collapse, caused in large part by fraudulent and risky lending practices by major financial institutions.
Trump is also ordering a half-year freeze in implementation of a requirement that financial advisors tell their clients up front whether the investment recommendations they are making to those clients are based on benefitting the advisor or the client (an important distinction since advisors can often profit handsomely by selling products like annuities, even though such moves may not be in the best interests of the client.)
Consider these pending moves as a group:
The Hensarling memo suggests stripping CFPB of its ability to file cases against financial institutions for unfair, deceptive and abusive practices AND eliminate data gathering on consumer complaints,
The steady growth in fine-print contract and agreement language that forces consumers to resolve complaints only through an arbitration process that heavily favors business.
The increasing hurdles to the creation of litigation “classes” to create class action suits. (The average consumer under Trump will be facing nearly Herculean obstacles to fighting back against usury, fraud, price gouging and monopoly practices such as those entailed in the Trump University case.)
A new administration whose senior executives have thrived through their use of just such practices from the Secretary of Labor and minimum wage, to Mnuchin and foreclosures, to Price and insider trading of medical stocks.
Changes in banking regulation restoring the right of banks to pursue the kinds of risky lending practices that caused the devastating crash of 2008.
A Justice Department about to be headed by Jeff Sessions and a Solicitor General nominee who is a soul mate of Mr. Sessions, Charles Cooper. Charlie Pierce at Esquire has to vile details of Cooper’s legal history. He would have been a popular lawyer a century ago.
Cooper is a close friend of Sen. Jeff Sessions, the Alabama lawmaker whom Trump has nominated to serve as attorney general, and helped to prepare Sessions for his confirmation hearings. Like Sessions, Cooper could prove to be a controversial pick. In addition to his role defending California's ban on same-sex marriage, Cooper also signed a brief on behalf of the federal government supporting Bob Jones University in its challenge to the constitutionality of an Internal Revenue Service policy denying tax exemptions to religious institutions that discriminate based on race. The university had argued that its ban on interracial dating was based on its sincere religious beliefs, but the Supreme Court upheld the IRS policy, by a vote of 8-1. And in 1986, as the head of the Office of Legal Counsel, Cooper signed an OLC opinion that argued that employers could reject job applicants with AIDS if they were concerned about contracting the disease.
Now more than at any time in modern history, we are going to need a fair and honest court system to protect the rights of consumers. Now more than at any time in modern history, that system is under dire threat.
Donald Trump has promised he would “drain the swamp.” He has said his every decision will be based on the needs of “forgotten” middle class voters. In fact, Mr. Trump is opening one of the world’s most vicious alligator farms, and plans to feed them with the middle class.