Trump Wants to Dismantle Consumer Watchdog CFPB | Financial News

Trump Wants to Dismantle Consumer Watchdog CFPB | Financial News


Hi. Welcome to America Uncovered. I’m your host, Chris Chappell. The Trump Administration has taken aim at
a powerful consumer watchdog, the Consumer Financial Protection Bureau,
or CFPB. It’s gone head to head with some of the
biggest banks to stop fraud and discrimination. But President Trump has called it “a total
disaster,” saying “Financial Institutions have been
devastated.” Yup. Simply devastated. The CFPB was created in 2010, in the wake of the Financial Crisis. According to their website, they “protect consumers from unfair, deceptive,
or abusive practices and take action against companies that break
the law.” They do that by policing credit card companies,
banks, auto lenders, and a variety of consumer finance products. Since 2010, “the agency has tormented banks
and mortgage lenders that defrauded consumers, forcing them to
return almost $12 billion to borrowers.” But let’s be honest. Most people have never heard of the CFPB. It’s just another stupid government acronym. But what makes the CFPB different from the
other banking regulators like the SEC, the FRB, and the OCC is that this one has four letters instead
of three. Also, the president of the United States wants
to destroy it. And then bring it back to life, like a zombie
bureaucrat. So now that you know how Donald Trump feels
about the CFPB —you might have already made up your mind
to love it or hate it. But before you click away from this video, let me at least give you enough background that you can tell all those jerks on Facebook why the CFPB is the best-slash-worst agency
ever. See, the Consumer Financial Protection Bureau is not like any other government agency. In fact, it’s barely even a government agency because it operates independently. One key reason is that the CFPB gets its funding directly from the Federal Reserve, instead of having to go through Congress, the way pretty much all other government agencies
do. What this means is that Congress doesn’t
have oversight. It’s like how after you move out of your
parents’ house and have your own job, you suddenly don’t have to do what they
say anymore. Here’s how one Congressman described the
CFPB in 2014. “It’s a wonderful example of how a bureaucracy will function if it has no accountability
to anybody. It turns up being a joke.” So fast forward to this past November. Richard Cordray, the long-time director of
the CFPB, stepped down. He appointed his Chief of Staff Leandra English
to be his successor, which CFPB bylaws allow him to do. Except they maybe don’t? So President Trump appointed his own guy to
be director. Wait, that guy looks familiar. Isn’t Mulvaney the same guy that called
the CFPB a “joke”? Well, this whole thing is Greek to me, because Ms. English sued. “Her attorneys argue English is entitled
to the position under the Dodd-Frank Wall Street reform law that says the deputy director becomes acting
director when the agency’s top spot is vacant.” The White House disagrees. They want Mick “It’s a Joke” Mulvaney
to run the CFPB. But now he wants you to know, he is absolutely
not out to destroy it. “The rumors that I am going to set the place
on fire, or blow it up, or lock the doors are completely
false. I am a member of the executive branch of government. We intended to execute the laws of the United
States.” Execute the laws? Poor choice of words. I think a lot of President Trump’s critics
are pretty confident he’s trying to execute the laws. So you might not get why Mulvaney called the
CFPB a “joke.” Well, I’m an expert in comedy, so please,
allow me to help. Here’s the set up. The CFPB has handled 1.2 million consumer
complaints. It’s tackled predatory payday loans, that can “interest rates that can exceed
400 percent.” It’s “investigated and fined 14 lenders
for over-charging student borrowers, lying to them about loan rates, and misrepresenting themselves as having a relationship with the federal
government.” Like in September, when Citibank had to return nearly 4 million dollars to
students they scammed. Going up against predatory and discriminatory
auto loans were also one of the many jokes that were
a total disaster. Take Ally Financial Inc. It had to pay 80 million dollars to all the
ethnic minorities who were given higher loan interest rates
than white people were. But that was still nothing next to the 185
million dollars they slammed Wells Fargo with for creating an estimated 2 million fake accounts
and billing customers for it. That was the largest fine ever paid to the
CFPB. And yet, Republicans are trying to “eliminate
the CFPB’s supervisory authority.” I mean, who needs a consumer watchdog that
watches things? I know, you’re probably not laughing right
now. In fact, you might be thinking President Trump
and the Republicans have sold out consumers in favor of bankers
and Wall Street. Oh ho ho, but now I get to the punchline. When the CFPB was created, it’s founders felt “it had to be protected
from political interference.” Hmm, I wonder why they felt that way? They did that by setting the CFPB up differently
than other regulators. They gave it government-like powers, but also made it independent from the government. Instead of being run by a board of governors, it’s run by a single director. And as I mentioned earlier, it gets money directly from the Federal Reserve, with no Congressional oversight. All the director has to do is ask for whatever
he wants, up to a certain amount, and he gets it. That’s how in just a few years, the agency swelled to from 58 employes, to
1,600, and a budget last year of nearly 650 million
dollars. And the director answers to no one. Even the president of the United States would
have a hard time firing him. And remember, Donald Trump is really, really
good at firing people. Also, the original CFPB bylaws allowed the
director to appoint his own successor, with no one else in the country having any
say. Which is what Richard Cordray tried to do
by appointing Leandra English. But in October of 2016, a federal court was
like, the way you guys are set up is kind of unconstitutional. The court wrote, “when measured in terms
of unilateral power, the Director of the CFPB is the single most
powerful official in the entire U.S. Government, other than the President. Indeed, within his jurisdiction, the Director of the CFPB can be considered even more powerful than the President.” Wow. That is kind of scary. That ruling came in the wake of an strange
realization which is that a super powerful, unaccountable
group was abusing its power! A mortgage lender, PHH, brought the CFPB to
court. PHH was accused of illegally referring consumers to mortgage insures for kickbacks. They were fined $6 million dollars by a judge. But CFPB Director Richard Cordray decided
to raise that fine to $109 million dollars. Is that a problem? Really sticking it to those fat cats? Well, part of the problem was that the fine
was arbitrary. And PHH’s lawsuit resulted in the structure
of the CFPB being ruled unconstitutional. That court also said PHH actually did everything
according to law, so why are you fining them over a hundred
million dollars? So why did Director Cordray think he could
get away with it? Well, usually the targets of the CFPB don’t
fight back. Because the CFPB is so powerful, they can levy fines without due process. Sometimes this can be really helpful, because rich bankers could otherwise tie up
a case in court for years. Sometimes this isn’t so good, like when the financial institution targeted
didn’t commit a crime, and yet has no opportunity to defend itself. That’s the opposite of “innocent until
proven guilty.” The American Banker says, “Absent such a pre-enforcement process,
a person or company may be forced to fight their way through the
entire enforcement process, often at substantial financial cost and irreparable
reputational damage …Worse, many would be forced to settle a
case to avoid those harms, even if the charges were flawed from the start.” In other words, a lot of financial institutions were so afraid to go up against the CFPB, that they just settled, regardless of whether
they had done anything wrong, because it would have caused them so much
damage. For example, a former CFPB enforcement attorney told this story about a small business owner
they went after. “The legal expenses would crush the man’s
business and cost employees their jobs; he’d had no opportunity to present evidence or tell Cordray his side of the story; and Enforcement hadn’t even conducted an
investigation.” The CFPB has overstepped its bounds in other
ways. You know how I said earlier Republicans are
trying to “eliminate the CFPB’s supervisory authority”? Well that sounds bad. But, supervision is different from investigation. To investigate someone for an alleged wrongdoing means you go to a court, get a warrant, subpoena
documents, etc. All of which are pretty easy and quick to
do. But supervision is like a permanent search
warrant that doesn’t require a court judge to sign. Supervisory authority is a lot more intrusive, which is why it’s usually only limited to
industries where if something goes wrong, it can cause
catastrophic harm. The CFPB has in some cases used its power to help consumers who’ve been defrauded. But sometimes, it’s not done quite right. Take the auto lender example I mentioned earlier, where the CFPB sued Ally Financial Inc for
discriminating against minorities. Well get this, “The CFPB itself didn’t know car buyers’
race or ethnicity, because it is illegal for dealers to collect
or keep such records.” So how did they know there was racial discrimination? They looked at people’s names on the documents, and guessed if they sounded like black or
hispanic names, and then built the whole case around that. Hmm, Mr. Black…gotta be a black guy! Shoot. As for the 80 million dollars Ally had to
pay for that, well, the CFPB also had to guess who to give
that money back to, since they didn’t know anyone’s race to
begin with. And this report to the US House of Representatives
found that, yes, that meant white people got paid. OK, so that all sounds a little…politically
incorrect. Maybe it was well-intentioned, I don’t know but paying people settlements based on how black or hispanic their name
sounds is incredibly unfair. But it’s not like the CFPB itself is racist! Oh. So it turns out, there may have been some serious racism going on within the CFPB. Whites hires were favored, minorities who were hired often got lower
salaries for the same work, and Republicans were almost never hired. And if you rocked the boat, you’d face retaliation, as this former employee testified. “Do you believe that white male managers have engaged in discrimination against women
and minorities? “Yes, sir.” “Why don’t they come forward?” “Sir, they’re afraid, because they know
I’ve be retaliated against, and also quite frankly, I’ve asked them and they don’t want to
make themselves subject to a public hearing.” So, if the CFPB is supposed to be a watchdog,
who watches the watchdog? As for the Wells Fargo story, yes, the CFPB hit them with a huge fine they
probably deserved. But despite all the CFPB’s power and supervisory
authority, they didn’t even find out about Wells Fargo’s
wrongdoing until it was exposed by the LA Times. Remember, the Consumer Financial Protection
Bureau was created in the wake of a serious Financial
Crisis, and it was given enormous power so it could quickly solve serious problems. In a way, it’s like the Avengers. When aliens attack New York, you’re really glad Samuel L. Jackson put
together a powerful team of gladiators. But afterwards you look back and you’re
like wait, the Avengers stopped the aliens, but they also destroyed like half of Manhattan. I get it, they did what had to be done. It was a crisis. But do we still want the Avengers around? I don’t want a 1,200-pound Incredible Hulk patrolling Grand Central Station everyday
arresting shoplifters. So the CFPB has stopped real fraud by financial
institutions fraud that other regulators may have not gone
after. But it also continues to have unchecked power
and a huge budget, and for years has been free from government
oversight. And that’s why Trump wants to put his own
guy in charge and bring the CFPB under the oversight of
the government, as other federal agencies are. Should the CFPB be under the authority of
the government? Or should they be completely independent but
still enormously powerful? It may take a Civil War to decide. What do you think? Leave your comments below. Once again I’m your host Chris Chappell. Thanks for watching America Uncovered.

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About the Author: Oren Garnes

100 Comments

  1. Problem with government = no term limits, people siting on a position for +30 years, unelected positions of power, legalized corruption.

    Companies= will rip you off and create monopoly if allowed to.

  2. People should realize that the CFPB is, itself, unconstitutional (specifically Article II, Section 2 of that document) and the law establishing it be immediately repealed, or take the long route and have the Supreme Court decide.

  3. Sorry, but when an agency is set up separate from Congressional oversight, that agency is not answerable to the American people or its representatives. That means the direction of the agency is completely dependent on the head of the organization, who may or may not do the right thing. The director is then free to use his sole discretion about what is best for the American people, or his cronies. This shouldn't exist in this form. Disappointed in your superficial analysis.

  4. I never knew Chris was a Republican. The source he cited for the CFPB being racist was from the "American Banker". That sounds really funny since you would think with a name like that, they would have a bone to pick with the CFPB. If only the EPA was structured like that. You falsely suggested that Trump actually cares about government oversight of the agency that oversees banks and financial institutions. If he did give a shit about that, then his move appointing Scott Pruit as the head of the EPA is totally out of step with what you're saying.
    I'm a Bernie supporter, and I still am. I heard Trump say that he was going to increase taxes on rich people, like himself. Not because I thought he was a noble person, not at all in fact. I just thought, for once, he was thinking about what would be the most sustainable thing to so. Taxing the rich more is the right thing to do, especially in the US, so I figured he would follow through on it to reduce the deficit. Thank fucking god I didn't actually support him because he 'did' lie about that. He lied about that like he does about 'everything.'
    So, by your logic, he'll just appoint Mick Mulvaney as director, going against the spirit of the law and the existence of the CFPB, just because you 'think' he'll do the right thing? China Uncensored really helped to shape my view of how I understand you guys. I thought you were on the side of common sense and the side of the people.
    If Betsy Devos, Scott Pruit and Jeff Sessions have no place being in government, neither does Mick Mulvaney, in the CFPB.

  5. Great work as usual! Even though it's more of an international issue, I'd love to see you guys tackle the issue of recognizing Jerusalem as the capital of Israel. Supposedly the past three presidents have talked about it, but Trump making a public statement actually drew a non-binding UN resolution (Which is basically an agreement to do nothing about something you don't agree with… feel free to use that.)

  6. IIii wouldn't joke about a civil war, Chris… The way the United States has been going, I am seriously expecting one in between 10 and 20 years.

  7. I've filed 4 complaints with the CFPB and they saved my arse in 2 of them. Without them if a bank wont give you your credit card signup bonus even though you met all the requirements, or lies about giving you a hard credit inquiry you'd have to take it up with the phone rep who says "I'm sorry there was no bank error" or the bank's arbitrator.
    Due process is important but so is hiring the best team of lawyers. I guess next time I get an unreasonable NSF fee with the CFPB gone I'll need a team too?

  8. i've been expecting this channel to delve into the corruption involving the GOP tax bill and FCC chairman Pai's former titles and jobs and anti-democratic process he's brought forth concerning protests against Net Neutrality repeal.

    Still waiting

  9. This is clear great topic. Another example of why I follow your channel America Uncovered. Following major news that is overlooked so by mainstream media. While those media outlets are covering whether or not washed his hands before returning to work or not is able to be used against him for an Impeachment!

  10. The CFPB does great work to protect consumers, and does a much better job then congress but they should change it to make them more accountable, and not abolish it all together

  11. No oversight is an understatement there are facts and then there’s opinions and here’s an opinion that’s based off facts but I know opinions are like assholes everybody’s got one as far as I’m concerned of it’s practices I think cfpb really stands for Communists For Paid Bribes. If anybody agrees or disagrees doesn’t really matter but if someone strongly disagrees then just simply ask me and I’ll respond back but I’m not gonna have a five paragraph comment of why.

  12. >You can't tell people's race by their names.

    Is that a joke? How many white people named 'Jamal', 'Matsumoto', or 'Raul' have you met.

  13. While I do back getting oversight on an agency to enforce our fraud and scam laws but no way is a trump appointed director looking to do proper reform but going to tie its hands from it doing its job

  14. Awesome job explaining this. It has also been reported that the CFPB has been taking the money they have won and redirecting it to leftist non-profit and profit corporations.

  15. "the cfpb has handled 1.2 million consumer complaints"….. what?!?!?! do you mean they have recieved that many complaints , ignored 1.198 million complaints, read through .002 million complaints, and responded to .0005 complaints ?

  16. Even as a liberal that leans in favor of the CFPB, I very much appreciate the balanced coverage that this channel provides. It exposed me to new information about the CFPB that I wasn't aware of before letting me get a more nuanced understanding of the situation. Keep up the good work Chris!

  17. Completely independent and enormously powerful? Try CIA. Yes, that's right. Oh, and they start wars, murder democratically elected officials and control the illegal drugs markets by controlling the drugs, drug dealers, and the users. Did I mention they are completely independent and enormously powerful?

  18. The CFPB is not Constitutional as an independent agency. It needs to be redesigned and if Congress wants, reimplemented. It is a bad precedent for the Fed to create and fund an unsupervised agency with enforcement power.

  19. I would just set it up so that the CFPB would be under the Judicial Branch and be given oversight by the Supreme Court. Thus they would be more or less kept out of politics and their power would be limited.

  20. They need oversight, but is putting it under the executive branch really the best idea, that would in effect put the most powerful agencies under the control of the most powerful office, thus undermining the separation of power even farther?

  21. So wait.. the answer to policing private banks.. is to create an entity that's funded directly by.. a private bank.. and has no congressional oversight.. hmmmmm

  22. Being from Europe, I'm not on face-recognition level with many congress members. The guy at 2:23, who is he? Republican, I think – is that right? Also, not big enough of a fish to appear at Twumps weekly open-mic kiss-ass sessions where people take turns thanking him for just about anything they can come up with, but likely very very anxious to get there – that about right, right?  – – –  Edit. Ah. Mulvaney. it's like that English stage-magician: "Please don't ask any questions, as it will all become evident in a matter of just a few, short minutes."

  23. It doesn't matter how you paint the CFPB's history or claims. The CFPB is funded by tax dollars, so it must adhere to the current administration's guidelines and decisions. Otherwise, IT NEEDS TO BE FUNDED BY VOLUNTARY (versus forced taxes) DONATIONS. The Congress and Executive administration – both hired by American taxpayers via democratic election, controls all funds. No rogue organization (including the Federal Reserve) can take our dollars and operate without oversight.

  24. DON'T BE FOOLED. The American taxpayers must have control, via Congress/Executive officials, over all organizations funded by our tax dollars. Otherwise, any administration can set up a powerful organization or militia that answers to no one.

  25. politicians and government employees keep talking ,and tell us how it is, and how its gonna be . we keep listening , some believing .
    at some point we the people must get our collective shit together and demand the TRUTH
    AND A POSITIVE CHANGE , or we are fukd.

    thank you for your time.

  26. The head of the CFPB should either be elected or they should appoint a board of directors to lifetime appointments (a la the Supreme Court) who select the head of the CFPB. I figure you can just gather some retired SEC, OCC, FDIC, etc heads and they can pick the leader.

  27. This sounds exactly how poor people are being prosecuted for bullshit and settling even when innocent because they can’t afford to go to court.

  28. So, you are confirming the federal reserve is a private entity stealing from the consumers? And using that tax money people pay?

  29. The CFPB must be doing something right if Trump is upset about it.

    He is so pro business he will remove any regulations to let businesses make a buck.

    Well it may need some breaks and supervision I guess.

  30. So here's some follow up, this organization was ruled unconstitutional and that the only remedy is to disband the organization.

  31. Sometimes I think our democracy is a joke. Does that mean I shouldn't be trusted to lead it? I don't think that follows.

  32. I understand your republican alignment towards CFPB, but as a Mortgage Banker I would like to say CFPB is the only thing stopping us from the next Recession(Caused by Mortgage Lending).

  33. Trump wants to control CFPB, cuz it's the Perfect Government Department to go after The Federal Reserve Bank, when they don't follow Trumps MAGA policy's.. The Storm ! It's coming !

  34. Most city governments function in a similar way in many areas, with zero due process or need for evidence. Does the bolt on the water meter in front of your house seem loose? City can choose to fine you whatever it decides is how much water you've stolen with no evidence that any water was stolen. If you question it, they just raise the fine. True story, Brownsville, TX. My relative left for the summer, when he came back the city said his water usage over the summer was suspiciously low. $800 fine for stealing water. The city refused to even look at his records of buying plane tickets.

  35. Very good program, Chris. I had forgotten all about the CFPB. Excellent unbiased review, as usual. You are indeed a very rare man.

  36. That was a pretty good attempt at arguing both sides.
    As much as I love Trump and think he's a genius troll, I wish you'd make it a little harder for me to pat myself on the back for voting for him.
    I think you'd be a little more credible to the people if you'd argue all sides as convincingly and with as much satire aimed at the opposition as you do the conservative side.
    Much thanks to you, Shelly and Matt for all your hard work!

  37. Well, I guess I'm changing my name to Shaniqua Rodriges. Also if the hulk was patrolling for shoplifters what you do you think the rate of shoplifting would be in his jurisdiction? I'm gonna say 0.

  38. I like trump how ever are the stupid yanks going to cause another GFC hay ? Round one was not destructive enough was it no it did not really touch Australia how ever it cause a hell of a lot of damage hence the name GFC.

  39. It sounds like these financial institutions are learning what it is like to be an average person in the justice system. Welcome to the squeeze. Remember, your better off taking the plea deal.

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