When something goes terribly wrong with a federally regulated system, as occurred in the financial crisis of 2008 that led to the meltdown of the U.S. economy, it’s difficult to believe adding another government agency is going to improve things. Frankly, most folks figure it could make the situation worse.
But an in-depth look by The Associated Press at the federal Consumer Financial Protection Bureau, which has been in existence just 14 months, shows it to be aggressively protecting the public in the wake of the fiscal fiasco that hurt so many. The agency was created as part of the Dodd-Frank Act of 2010 aimed at overhauling the financial products and services industry.
The agency has launched dozens of enforcement probes and issued more than 100 subpoenas demanding data, testimony and marketing materials — sometimes amounting to millions of pages — from companies that include credit card lenders, for-profit colleges and mortgage servicers, according to AP.
In more than two dozen interviews with agency officials and industry executives, AP learned about the new agency’s behind-the-scenes efforts that have been so aggressive that it has caught many in the financial industry off guard.
This has resulted in many banks, payday lenders and credit card companies tightening their record-keeping and bracing to hire defense lawyers.
We see this as positive for consumers who, despite their best efforts, were confused by the smooth talk of those making financial deals. This proactive approach is far better than having to help consumers repair the damage when a deal goes horribly bad.
The bureau’s oversight has forced changes to the mortgage application and foreclosure process, the way people lodge complaints against financial companies and, in some cases, what fees they can be charged.
“The CFPB is a new animal, and they have to establish their turf and a way of doing business,” says Jack Conway, the attorney general of Kentucky and an outspoken critic of for-profit colleges such as the well-known University of Phoenix. “If that breaks from standard practice of other regulators, I don’t have a huge problem with it.”
Given the aggressive nature of the financial service industry, this makes sense — fighting fire with fire.