Weakened U.S. consumer watchdog expected to bite back if Biden wins election

In this news, we discuss the Weakened U.S. consumer watchdog expected to bite back if Biden wins election.

WASHINGTON (Reuters) – A ten-year Republican campaign to weaken the independence of the consumer watchdog should backfire if Democrat Joe Biden wins the presidential election, giving him the power to quickly replace the director of the agency by a consumer champion, said nearly a dozen. lawyers, lobbyists and policy experts.

The Consumer Financial Protection Bureau (CFPB) has been a political lightning rod since its inception in the wake of the 2009 financial crisis, adored by Democrats as the guardian of ordinary Americans but insulted by Republicans as being too powerful and irresponsible.

The Trump administration has cut the wings of the agency, relaxing the application and some rules, and asking the Supreme Court to decide whether the president should have the discretion to fire his director, as Republicans have long argued. .

In June, the court ruled it could.

The landmark move, however, would also give a Biden presidency the power to fire current CFPB director Kathy Kraninger, a Trump-appointed Democrat accused of bowing to industry lobbyists.

Kraninger, whose term ends in 2023, declined to be interviewed, but said the agency should focus on policing bad actors rather than sanctioning companies for minor procedural violations.

“Given the recent Supreme Court ruling, if Biden wins the White House and the Senate also turns around, I think there’s a very high likelihood that Kraninger will be replaced quickly,” said Christopher Willis, partner. from law firm Ballard Spahr, adding that some banks, anticipating new leadership, were becoming increasingly risk-averse on consumer issues.

Powerful progressives like Senator Elizabeth Warren believe the CFPB should play a key role in tackling wealth inequalities and racial justice issues highlighted by the pandemic, and policy experts expect Biden to appoint a progressive choice that would intensify enforcement and revise some of Kraninger’s rules.

Chief among them are payday loans and proposed debt collection regulations, which influential consumer groups say will not protect Americans. They are also hoping the Biden manager would drop proposals they believe may make it more difficult for low-income Americans to get mortgages.

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Factbox: What a Joe Biden win could mean for financial policy

Other priorities should include eliminating exorbitant loan rates and abusive debt collection practices, addressing student debt burdens and gaps in minority credit access, and overhauling the assessment system. credit, they said.

“It will be one of the most important jobs for progressives to make sure one of their own takes over so he or she can start rebuilding the office quickly,” the Washington research group wrote. Beacon Policy Advisors in a client note.

Potential candidates who have floated in Democratic circles include Warren’s Protected Representative Katie Porter, Federal Trade Commissioner Rohit Chopra and Bharat Ramamurti, Warren’s former aide who sits on a congressional pandemic watch panel. .

Thomas Pahl, Kraninger’s deputy and longtime CFPB staff member, is a likely candidate to head the agency in the meantime, while Biden’s choice is approved by the Senate, the sources said.

Porter, Chopra, Ramamurti and Pahl declined to comment.

“As President, Biden will end the Republican assaults on the CFPB and he will work to revitalize his efforts to hold the big banks and financial institutions accountable and ensure that hard-working Americans are treated fairly,” Gwin said. . spokesperson for Biden.

See here a FACTBOX of what a Joe Biden win could mean for financial policy.

PANDEMIC PAIN

As millions of unemployed Americans struggle to make ends meet, the CFPB is more important than ever, consumer groups say.

From March to July, complaints to the agency jumped 50% from the same five-month period a year ago, due to credit issues, according to an analysis by the US PIRG and Frontier Group.

The agency has launched a campaign to educate consumers on how to protect their finances during the pandemic, but it could do more to help Americans cope with foreclosures, evictions and repossessions, said Diane Thompson, Lawyer at the National Consumer Law Center and founder of the Consumer Rights Regulation Engagement and Advocacy Project.

In general, however, the CFPB has taken a more moderate stance on the industry under Trump, averaging 20 enforcement actions per year, compared to 31 under former President Barack Obama, according to a Reuters analysis. And in some of the Trump administration’s enforcement actions, companies walked out without paying the full penalty.

“Businesses can blink and nudge and walk away without following the law,” said Ed Mierzwinski, director of PIRG.

A spokeswoman for Kraninger pointed to agency data which showed that in 2019, the bureau had achieved the third highest amount of total remedy and total relief from consumers in a 10-year history.

When applying sanctions, staff must weigh the benefits and costs of pursuing litigation, Kraninger said. She also said it was best to rely on strict, behind-the-scenes oversight of financial firms to prevent wrongdoing.

Lawyers, however, said clients took a potential Biden CFPB more seriously.

Quyen Truong, a partner at Stroock & Stroock & Lavan law firm and former CFPB lawyer, said some companies were starting to strengthen compliance teams.

“Proactive clients are already identifying areas or practices that could raise questions under a new CFPB head,” she added.

Reporting by Katanga Johnson; Edited by Michelle Price and Cynthia Osterman

Original © Thomson Reuters

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