“Why Every American Should Want a Strong CFPB,” an Op Ed by Better Markets’ President and CEO in today’s Los Angeles Times.  It focuses on what’s really at stake in the fight over the Consumer Financial Protection Bureau (CFPB), not the personalities, the legal actions or the political maneuverings.  Read the entire Op Ed here.

And, So it Begins…………….Trump’s Acting Consumer Protection Director Begins Immediately to Stop Protecting Ripped Off Americans and Helping Predatory Financial Companies:  As reported in The New York Times: 

“The defanging of a federal consumer watchdog agency began last week in a federal courthouse in San Francisco.

“After a nearly three-year legal skirmish [read the complaint here], the Consumer Financial Protection Bureau appeared to have been victorious. A judge agreed in September with the bureau that a financial company had misled more than 100,000 mortgage customers. As punishment, the judge ordered the Ohio company, Nationwide Biweekly Administration, to pay nearly $8 million in penalties.

“All that was left was to collect the cash. Last week, lawyers from the consumer bureau filed an 11-page brief asking the judge to force Nationwide to post an $8 million bond while the proceedings wrapped up.

“Then Mick Mulvaney was named the consumer bureau’s acting director.

“Barely 48 hours later, the same lawyers filed a new two-sentence brief. Their request: to withdraw their earlier submission and no longer take a position on whether Nationwide should put up the cash.

“It was a subtle but unmistakable sign that the consumer bureau under Mr. Mulvaney is headed in a new direction — one that takes a lighter touch to regulating the financial industry.”

In another ominous sign, Acting Consumer Protection Director Mulvaney disclosed that he is going to dramatically politicize the CFPB, which is supposed to be independent like the Fed, FDIC and other financial regulators.  He announced that he is going to assign political staffers to the career professionals who head up the CFPB divisions.  Confirming that that the fox was being put in charge of the henhouse, The American Banker reported that “industry representatives have welcomed Mulvaney’s leadership.”

Taking the cops off the Wall Street beat isn’t just happening at the CFPB.  Bloomberg reported on one of many other recent examples, an OCC “Plan to Stop Bankers From Seducing Regulators Dies Under Trump.” 

Why Should Anyone Care About all This?  Because Deregulation Allows Wall Street to Prey on Investors, Consumers and Hard-Working Americans, Which Will Also Create the Conditions for Another Financial Crash.

Offering a blistering critique of the Trump administration’s deregulation frenzy and the potential consequences, last week Better Markets’ President and CEO participated in the Global Shareholder Activism Conference in New York, delivering a paper entitled, “Deregulation Unleashes Wall Street to Prey on Investors, Consumers and All Hard-Working Americans.”

After reviewing the devastating impact of the 2008 financial crisis and its $20 trillion cost to the country, the paper offers an important, cautionary and troubling revelation that legislative changes to current financial protection rules is neither the easiest nor the most effective way to deregulate the financial industry:

“Installing industry friendly nominees and appointees at the financial regulatory agencies is the most effective way and much quicker than trying to change the law. 

“President Trump has been doing this virtually from day one and the change over from President Obama’s appointees to President Trump’s appointees is almost complete, with just the FDIC and CFPB still lead by holdovers.    The Treasury department, SEC, CFTC and Office of Comptroller of the Currency (OCC) are all lead by Trump appointees.  This also means that Trump appointees have a working majority – if not supermajority — on the Financial Stability Oversight Council (FSOC).”

The implications and negative consequences, Kelleher writes, of these actions, on investors, consumers, financial stability and the economy, to say nothing of every American, cannot be overstated.  Rulemaking at all the financial regulatory agencies has come to a dead-stop.  Existing rules have come under scrutiny, the likely result being their modification or outright revocation.  The implementation and interpretation of existing rules will likely be so relaxed as so render them meaningless.  And, similarly, meaningful enforcement cases will also decrease substantially.  All of this can happen and much of it is happening already without any legislative action and without one word of the Dodd-Frank law changing.

The full paper can be read here.

Needless and Dangerous Legislative Deregulation Is Happening Also. 

It is remarkable with all the problems facing the country that the first significant bipartisan legislation is to deregulate finance and weaken the provisions of the Dodd-Frank financial protection law passed just seven years ago.  It is a sad and unfortunate example of the power, might and influence finance has in Washington DC. 

They claim this is being done because banks need regulatory relief from the burdens of the financial protection rules.  However, as we have demonstrated time and again, the indisputable facts show that the banks aren’t hurting, but thriving as revenues, profits and lending are all increasing, some at historic levels. 

The last people who need relief are bankers and financiers, who will soon be pocketing record bonuses while dramatically increasing Americans’ debt load, which is now dangerously high.  Elected officials seem to forget that hardworking Americans are a profit center to the banks, but Americans are on a treadmill, working harder and harder for less and less while going deeper and deeper into debt.  This is going to get worse soon as the Fed increases interest rates, which will again take money out of the pockets of Americans and move it into the pockets of the banks, increasing their revenues, profits and bonuses even more.  That is the flip side of banks’ profits, which no one talks about.

Many of these deregulatory ideas have been around for a number of years and we detailed how baseless they are in a blog post here.  For example, one suggestion would severely curtail or outright eliminate enhanced prudential standards for 25 of the largest 38 banks by increasing their threshold for oversight from $50 billion to $250 billion.  Although some absurdly claim this relief is needed for community banks, it would only benefit .5% of the largest and most profitable banks in America.  Another example of needless regulatory relief is the Volcker Rule, which prevents banks – backed by U.S. taxpayers — from high risk trading and gambling in stocks, futures, and derivatives for their own profit.

These and the other deregulatory proposals are being promoted under the guise of the need to lighten regulation to increase bank profitability and to use those profits for additional loans to the real economy.  The problem is that those claims are baseless.  When records are being set for the stock market, bank profits, and all types of lending, we should be celebrating the reforms that enabled those results, not trying to weaken them.