DoJ Joins Suit Against Consumer Protection Bureau Because Trump Doesn’t Have Control Over the Agency
The Department of Justice, under former Trump campaign staffer Jeff Sessions, has filed an amicus curie brief in a federal appeals court against the Consumer Financial Protection Bureau (CFPB), an executive agency of the US government that is not under the control of the executive branch.
The DoJ contends in their 33 page brief that the CFPB violates the US constitution because it “could engage in ‘extreme departures from the president’s executive policy’.”
The CFPB was created under Dodd-Frank, and its special privilege as an agency untouched by a sitting president is not under fire thanks to the US District Court of Appeals for the District of Columbia ruling that recommended that the CFPB should be restructured to allow the president to fire the director of the agency at will.
The DoJ now argues that because the president cannot simply fire the director of the CFPB, “there is a greater risk that an ‘independent’ agency headed by a single person will engage in extreme departures from the President’s executive policy.”
The brief states in part: “Limitations on the president’s authority to remove a single agency head are a recent development to which the executive branch has consistently objected. Under the Constitution and Supreme Court precedent, the general rule is that the president must have authority to remove executive branch agency heads at will.”
Republican and former adviser to the Trump campaign Jeb Hensarling, who is also chairman of the House Financial Services Committee has commented in the recent past that the CFPB is a “rouge agency” that hurts consumers.
Hensarling said: “The bottom line is the best consumer protection [is] competitive, innovative markets that are transparent. Now, they need to be vigorously policed for force and fraud, but the agencies that do that need to be accountable. And instead, we’ve had this agency ruled totally unaccountable. It is a rogue agency.”
The Trump administration has very clear reasons for wanting more control over the CFPB.
In October of 2015, the CFPB was considering banning banks and other financial institutions from forcing arbitration instead of allowing customers to sue in order to deflect class-action lawsuits which have huge payouts.
According to Pew Research, 66% of checking account agreements have mandatory arbitration clauses, 98% have restrictions waving customer right to a jury trial, and 32% require customers to pay for arbitration and other expenses.
Part of the problem is the bank’s allowance to choose a private arbitrator which is approved by the banker, not the customer. Because the decisions of the arbitrator are final and not reviewable, the favor is with the banks.
And earlier that same year, the CFPB filed a new set of rules aimed at preventing payday loan operations from targeting low-income borrowers who will be buried by high fees and rising debt loads.
These new rules cover payday loans, vehicle loans, loans using a car as collateral and various other forms of high-cost lending.
Enders will be responsible for making sure debtors can repay the loan in full on time before extending the loan by checking their income, borrowing history, previous financial obligations and any other indicators that the borrower would most likely default or roll over the loan.
• A 60 day respite between loans
• Lenders must provide affordable repayment options
• Loans cannot exceed $500
• Loans cannot have multiple finance charges
• Loans cannot use a vehicle as collateral
Regulations on interest rates and repayments as a share of income include mandatory capping off to prevent run-a-way fees.
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