All Your Consumer Protection Is Dying
Like a group of friends in a remote cottage in a campy serial killer movie, your consumer protection is secretly killed one at a time as you run to put out other fires .
Well, do it two at a time. A federal judge yesterday ruled that Title X of the Dodd-Frank Act, which created the Bureau of Consumer Financial Protection, is “generally” unconstitutional . And the Trump administration’s Labor Department was unable to appeal a court ruling overturning the fiduciary rule, thereby killing him.
But that’s not all that the Trump administration has been able to pull back.
Consumer Financial Protection Bureau
The CFPB was created by Dodd Frank after the financial crisis to hold institutions accountable for their bad behavior.
The CFPB pursued predatory student loan lenders and payday lenders, banks like Wells Fargo who defrauded customers and, in the case of the lawsuit mentioned above, sued the company that it claims “defrauded the original 9/11 defendants. with cancer and other diseases. and NFL footballers with millions of dollars in traumatic brain injury. “
In fact, with regard to just about any financial wrongdoing nowadays advice is when you have been cheated or you think something illegal has happened – let’s say your student loan specialist says you haven’t made X payments when you know you have. or Wells Fargo opens an additional checking account in your name without your knowledge to file a complaint with the CFPB, which then investigates the complaint. And for this reason, since its inception, it has become a target for the “business lobby”.
It is likely that the decision will be appealed, but this is bad news for people who want more methods to deter lenders, banks and other financial institutions.
Education department
Education Secretary Betsy DeVos works overtime to ensure that minority students and those who fall prey to predatory commercial schools and student loan lenders have as little remedy as possible from the federal (and state) government.
As I said earlier , so far during her short tenure, DeVos has enacted rules that would protect students from predatory commercial schools, andremoved the 60-day grace period for students who defaulted to streamline their payments and avoid commission of 16 percent. Education is also telling states that they should end their efforts to regulate student loan organizations, and DeVos has removed rules to help students with disabilities, as well as guidelines on sexual harassment cases on college campuses.
Banking deregulation
Last month, federal officials proposed repealing the Volcker Rule, another aspect of the Dodd-Frank Act, which aims to “stop Wall Street from gambling risky bets on customers’ money for the bank’s own profits,” as I reported at the time. Kimberly Palmer, a banking expert at NerdWallet, told me that consumers are unlikely to feel the impact of this action until “a problem like a financial crisis or bankruptcy arises.” Just when you want to know.
President Trump also lifted a rule that protects African American and Latino consumers from discrimination by auto lenders and signed legislation that completely exempts small and medium (read: most) banks from Dodd Frank.
Fiduciary rule
I’ve written about the fiduciary rule before , and this is one of those things that seems so obvious that it racks your brains.
For this to be done: Implemented by the Obama administration, it would require all retirement advisors to act in the best interests of their clients, not their own – in other words, to meet fiduciary standards. This is what certified financial planners and other types of consultants should already be doing, but there is a whole industry of broker-dealers and other types of financial consultants that don’t.
This means that if you go to one of them for investment advice, they may sell you a product (say, a certain fund) that will give them a pullback, while you are left with potentially lower returns and higher fees. than other similar product. produced. The Obama White House Council of Economic Advisers has found that non-taxationers are costing us, average retirement investors, 401 (k) / IRAs, $ 17 billion a year .
This is in the midst of America’s retirement crisis, making it all the more egregious that the government is doing nothing to keep the average American’s already inadequate retirement savings from being diminished further by brokers looking to cash in on us quickly. To avoid such a fate, you must be sure that anyone you receive financial advice on specific investments and plans is a fiduciary . Here’s how to find it .
Now, according to Barron’s , the SEC is creating its own “best interest rule,” which also requires brokers to put their clients’ interests ahead of their own. The Securities and Exchange Commission is awaiting public comment by August 7th.
One by one, the rollback of our core consumer protection products is alarming. Taken together, this can have devastating consequences for our collective financial future.