Brown, Warren call on CFPB to protect consumers, not financial firms
Sens. Sherrod Brown of Ohio, Elizabeth Warren of Massaschusetts and three other Democrats on the Senate Banking Committee urged the director of the Consumer Financial Protection Bureau to provide relief to consumers — not to financial institutions — during the coronavirus pandemic.
The five senators sent a letter to CFPB Director Kathy Kraninger Tuesday calling the bureau’s response to COVID-19 “tepid and ineffectual at best.” The letter also was signed by Sens. Brian Schatz of Hawaii, Chris Van Hollen of Maryland and Jack Reed of Rhode Island.
“In the face of this pandemic, the CFPB is needed now more than ever to protect and mitigate the financial harm being inflicted on American families,” they said. “The CFPB’s guidance has actually weakened protections for consumers—enabling predatory lending, watering down fair lending laws, making it easier for lenders to get away with discrimination against women- and minority-owned small businesses, reducing timely communications with struggling homeowners, and making it easier for credit card and debit card companies rip off their customers.”
The senators laid out the various actions the CFPB has taken in the past three weeks that have mostly aided financial firms. For example, they cited guidance that the bureau issued along with the other bank and credit union regulators encouraging institutions to issue small-dollar loans.
“This guidance opens the door for banks and credit unions to offer predatory payday loans that trap consumers into cycles of debt,” the letter stated.
The senators also noted that the CFPB’s first response to the outbreak was to roll out a “Start Small, Save Up,” initiative championed by Kraninger and encouraging consumers to save money in an emergency.
“It is misguided to suggest that the problems confronting millions of American households—especially those who have lost their jobs—can be fixed if they just put away a few extra dollars each paycheck,” the senators wrote.
The CFPB also waived quarterly reporting requirements for banks to submit Home Mortgage Disclosure Act data, postponed a small-business data collection and waived certain reporting requirements for term and pricing information by credit and prepaid car companies.
The CFPB also provided guidance on credit reporting that allows lenders to investigate credit disputes within 45 days, up from the 30 days required by the Fair Credit Reporting Act.
“Despite touting the importance that 'lenders report accurate information' about consumers, the CFPB is letting those same lenders get away with not fixing their mistakes, with no regard to the harm to consumers,” the senators said.