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CFPB Unknown and Fighting for Its Life

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If ignorance is bliss, lots of Americans are humming a happy tune.

Specifically, 81% of Americans polled by did not know enough about the new Consumer Financial Protection Bureau to have an opinion about it, even though the five-year-old agency has collected refunds for 27 million people.

The 17% who did know about the bureau viewed it favorably by a 3-to-1 margin. Democrats favored it by about 4-to-1, and Republicans by 2-to-1.

CreditCards polled 507 adults by telephone in mid-February.

The CFPB, which was authorized by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, is the only federal agency with a mission of protecting consumers in the financial sector, CreditCards said in its report released Thursday.

The agency can issue rules that govern financial companies’ conduct, such as “know before you owe” rules against deceptive mortgage lending and the “ability to pay” rules designed to prevent home foreclosure.

Since opening in 2011, the watchdog agency has cracked down on 179 companies, including credit card issuers, mortgage brokers and student loan servicers.

“Following the 2008 financial crisis, many consumers were left feeling vulnerable and suspicious of financial institutions,” Matt Schulz, senior industry analyst at, said in a statement.

“The inception of the CFPB in 2011 made financial companies accountable for improper practices and provides consumers a formal course of action for infractions. Notably, the CFPB reports that it has delivered $11.7 billion in relief to consumers from its enforcement actions.”

In its poll, CreditCards asked respondents whether they would support an unnamed federal agency that protects consumers from unfair, deceptive or abusive conduct — the CFPB’s stated mission. Eighty percent said yes, with about as many Republicans in favor as Democrats.

Why, then, is the CFPB such a well-kept secret?

CreditCards said a key reason may be that most of the refunds the agency has ordered are paid by the offending companies directly to their customers, leaving the agency in the background.

It cited agreement by Capital One, Citi and 10 other credit card issuers to refund $2.8 billion to customers for dubious marketing of “debt protection” insurance and other add-ons. The refunds took the form of credits to customers’ accounts, or checks mailed by the banks.

Existential Crisis

The CFPB is now in a fight for its life on Capitol Hill.

CreditCards noted that since the November elections, Republicans have increased their efforts to replace its Barack Obama-appointed director Richard Cordray, or put its budget, which is currently funded by the Federal Reserve, under congressional control.

In February, lawmakers introduced measures to close the consumer protection bureau entirely.

Opponents contend the CFPB is an example of government overreach; proponents point to the legion of consumers it has helped.

According to CreditCards, policy analysts figure that an eventual compromise will entail some loss of power by the agency and perhaps a shift of funding to Congress.

The report said Rep. Jeb Hensarling, chairman of the House Financial Services Committee, is working on legislation that would largely reshape the CFPB, but has yet to introduce it, suggesting to analysts that the details may be subject to negotiation.

Republicans in Congress already have the ability to block new regulations the agency might try to issue, using the Congressional Review Act.

But shutting down the agency would be more difficult.

“They need 60 votes in the Senate to close it,” Robert Pozen, a former Fidelity Investments vice chairman now at the Brookings Institution, told CreditCards. “I don’t think they have that.”

What’s more, existing banking agencies are not equipped to take on the consumer watchdog role.

The Republicans’ idea of replacing the single director with a bipartisan board would give CFPB a broader base of support, Pozen said. The leadership structure would follow the tradition of other independent agencies such as the Federal Trade Commission, lending the new agency greater legitimacy.

“Both sides will bark very hard,” he said, “but there are obvious compromises.”


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