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Consumer bureau attacked

By Polyana da Costa · Bankrate.com
Friday, May 13, 2011
Posted: 3 pm ET

There is no question the lack of regulatory oversight played a huge role in the collapse of the mortgage and housing markets.

Yet, the concept of creating a more efficient system to help protect consumers' interest against the predatory lending practices that contributed to this crisis seems to be viewed as absurd by some banks and politicians.

On Friday, a U.S. House committee approved three measures to weaken the power of the Consumer Financial Protection Bureau (CFPB), expected to open in July. The CFPB was formed as a result of the Dodd-Frank financial-overhaul law passed last year. The agency will be in charge of writing mortgages and other financial rules to help protect consumers.

One of the bills approved by the committee Friday would make it easier for the newly formed Financial Stability Oversight Council to block new rules created by the CFPB. A second bill would put a five-member bipartisan commission in charge of the bureau, instead of a single director.  And a third bill would prevent the bureau from having any regulatory authority when it opens on July 21 until the Senate confirms a director.

These stalling tactics are unlikely to succeed. Even if the measures win approval of the full House, the Democrat-controlled Senate would probably oppose them and President Obama could also veto the bills.

Still, it's mind-boggling to watch lenders and politicians complain about financial reform after these institutions have received billions of taxpayer dollars in bailouts, while consumers continue to feel the pain of the economic crisis on a daily basis.

The committee's vote on these bills has angered many consumer advocacy organizations.

Here is a statement by the Center for Responsible Lending on the subject:

"By their votes today to weaken the Consumer Financial Protection Bureau (CFPB), a majority of House Financial Services Committee members showed they care little about American’s wallets or our nation’s economic rebound.  Instead, they voted to stack the rules in favor of the same lenders and regulators who brought us the subprime mortgage crisis and national financial meltdown."

Really, what's so absurd about an agency that will help prevent financial institutions from taking advantage of consumers?

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7 Comments
Robby Robertson
May 24, 2011 at 12:53 pm

The banksters bought the election last year. They almost got their biggest supporter and subject for campaign contributions, Senator Shelby, the chairmanship of the Senate committee. The banksters need another $3.3 trillion from the taxpayers.

Bob
May 18, 2011 at 12:51 pm

Do you really have any idea of the impact of CFPB? Have you read any documents relating to the scope of this organization? Do you know how much money the creation of this new government organziation ( fyi - Taxpayers pay for government organizations)is going to cost all of us? Be informed please. The rules passed by this Bureau will basically mean more costs and paperwork passed on to the banking industry. Guess who will pay for those changes...you got it..the customers. My local community bank did not get involved in subprime lending what so ever, but they will certainly be caught in the CFPB's regulatory net. Please have a full understanding of both sides before posting an article on this page. Embarrassing for bankrate.

Alexis
May 17, 2011 at 7:40 am

Some people think its okay to stay safe in the middle, but nothing is ever changed while you remain in your comfort zone.

The point is that not every homeowner brought into subprime loans. We all however, have felt the affect of it. Even homeowner's who pay their mortgage on time each month have felt it. The loss of property value has made it almost impossible to even refinance while rates are at an all-time low. Three months before this entire blow out occurred my home was appraised for $340,000. I was then released from paying mortgage insurance because my home was valued at least 20% above what I owed. Today I look at some of the websites that list property values on line and my home is valued at $212,000. A new appraisal by the bank to refinance resulted in an appraisal of $250,000. My property taxes, however has increased instead of decreasing. So, tell me how is this not the fault of the banks and mortgage brokers that created this monster.

The consumer continues to carry the burden of the mortgage crisis and yes, we need someone one on our side too.

Eric
May 16, 2011 at 10:03 am

I can see both side of the argument. The days of one side trying to blame another should be over. Both are at fault.
Banks sould not have pushed confusing loans on the people.
The people should have done their homework and not accepted these shoddy loans.
Both side are still playing the victim card. Get over it.

Jeff
May 16, 2011 at 6:32 am

We definetly need a body to protect our interest like Consumer Financial Protection Bureau. They are trying to undermine the CFPB even before it opens. Nice job nuts, who do they think they are working for?