The former Texas Congressman who is considered to be President Donald Trump’s leading candidate to run the Consumer Financial Protection Bureau just said that while he would not eliminate the watchdog agency completely, he wants to gut most of what it does to keep Americans safe from credit fraud and scammers.
Republican Randy Neugebauer, who represented Texas 19th Congressional District until January, said in an interview with The Independent that he met with Trump after the election and they talked about deregulation of financial markets and “gutting the CFPB.”
“The government,” says Neugebauer, “ought not to be telling you what kind of financial products are appropriate for you.”
Trump and Neugebauer want to strip away most of the protections put in place to protect consumers from the schemes of devious credit card companies, predatory payday lenders and greedy Wall Street banks that President Obama and the Democrats determined were major causes of the Bush Recession and the ensuing global economic collapse.
They want to return to a time when financial institutions have the upper hand in negotiations with consumers, many of whom lost their savings and pensions to predatory banks and lenders.
Trump himself was discovered to have been running financial scams before becoming President, including Trump University (for which he paid a multi-million dollar settlement), and failing to pay the vendors and craftspeople who worked for his businesses, often demanding that they take reduced fees. He now brings that attitude to his desire to declaw the CFPB.
Among regulation’s Neugebauer wants to wind down are protections against unfair and abusive practices by mortgage servicers, payday lenders, and debt collectors. Neugebauer said Trump agrees with him that consumers should be able to choose loans or mortgages whether they are good or bad for them.
For instance, he wants less regulation on payday lenders who have been accused of preying on the poor with high-interest loans while offering little or no transparency about the real impact of their lending policies.
“Millions and millions of people use payday lending as a source of credit because they have poor credit scores,” he said.
Neugebauer said he discussed with Trump the need to roll back or eliminate other provisions of the Dodd-Frank law, passed in 2010. The law was put in place after the 2008 global financial crisis to curb the most abusive practices by banks and other lenders and financial institution, and created the CFPB.
The CFPB had strong support from President Obama and was initially run and created by Senator Elizabeth Warren (D-MA) before she became a Senator from Massachusetts. It has been credited with helping consumer recover billions of dollars from credit scams and fraud by banks and financial companies.
Neugebauer doesn’t deny the CPFB has done some good but believes it has cast too wide a net, and that many of those who bad actors have now been caught, making the organization unnecessary going forward.
“Blanket regulation over the entire financial market is impacting some of the entities that possibly were part of the cause,” says Neugebauer, “but in many cases entities that really didn’t have anything to do with the crisis are affected.”
“Many folks, including myself,” he added, “think we went too far.”
The CPFB is currently run by Richard Cordray, whose term runs through 2018. However, last October a Federal Appeals Court ruled the structure of the CPFB was unconstitutional and said the President has the right to replace the director.
Senator Ted Cruz (R-TX) and Rep. John Ratcliffe (R-TX) submitted legislation in February to shut down the CFPB entirely, but Neugebauer believes that would take it too far.
Neugebauer thinks a lot of what the CFPB does can be done more effectively by the states. However, past history has shown that is not an effective way to protect all American consumers.
For many Republicans that may not be the point. They just want to get rid of the regulations and let the market decide, to the benefit of big business, which is another way of saying, consumers beware!
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