CFPB News

Read the latest on the Consumer Financial Protection Bureau (CFPB).

 

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  • Consumer Financial Protection Bureau: Please Ban These Four Products! 
    CBS MoneyWatch 17 Jul 2011
    MoneyWatch columnist Marlys Harris was disappointed by Elizabeth Warren's recent statement that the new Consumer Financial Protection Bureau would not seek to ban products. Instead, Warren called an outright ban "a tool in the toolbox" and stressed that "that's where it should stay." Harris assumes Warren is making attempts to appease CFPB opponents; but Harris argues that limiting consumer choice is not always a negative course of action, because there are some toxic items that should never be on the market. She likens taking these products off the market to the government's regulation of rotten meat, calling out rotten products such as payday loans, negative amortization mortgages, credit card debt protection programs, and negative option marketing. Payday loans, according to the Center for Responsible Lending, create spirals of debt for many consumer who cannot repay a loan after two weeks and are forced to renew. Repeated rollovers and exorbitant interest rates make payday loans unproductive and toxic. Negative amortization mortgages -- popular during the housing boom -- do not cover the amount of principal and interest due, which means a homeowner's mortgage balance rises over the years even as their equity decreases. These loans do not make sense for borrowers or lenders. Another toxic product resulting in high fees is a credit card debt protection program, which supposedly promises to cancel a credit card balance or suspend the minimum monthly payment and waive interest should a consumer die, become disabled, or lose their job. Harris says the last of the four toxic products -- negative option marketing, whereby a vendor fraudulently signs customers up and bills them for a subscription or membership club, after obtaining their credit card number from a valid phone or online purchase -- is essentially fraud.
  • Warren: No Plans for Bans 
    Wall Street Journal 15 Jul 2011
    Speaking before the U.S. House Oversight and Government Reform Committee, White House adviser Elizabeth Warren said that the new Consumer Financial Protection Bureau (CFPB) will not seek out bans for certain financial products, though the agency does have the ability to do so. "We don't have any present plans [to use that tool,]" she said. GOP lawmakers continued to press Warren on how the agency would regulate financial products, including whether it would ban payday loans and cap interest rates or oversee auto loans and insurance products. Warren indicated that the CFPB has "limited" power over business credit cards, and according to Dodd-Frank, the agency cannot cap interest rates. On July 21, the agency will inherit the consumer protection authority of the U.S. Federal Reserve, Federal Trade Commission, and other agencies, and the agency will be allowed to write new consumer protection laws and supervise financial firms to ensure products they offer do not harm consumers.
  • Fed's Raskin: Consumer Protection to Remain Vital Role for Fed 
    iMarketNews.com 29 Jun 2011
    Federal Reserve Gov. Sarah Bloom-Raskin on June 29 said that consumer protection will always play an instrumental part in the central bank's assessment of how the U.S. economy is progressing. According to her, consumer protection is essential to a growing and flourishing economy. Raskin also noted that traditional banking services no longer meet the needs of many Americans, which has created a space for non-conventional financial firms. Links between consumer spending, consumer finance, and consumer protection to the economy "are of critical importance and will always have to be at the forefront of what the Federal Reserve always thinks about," she explained. Raskin added that it is important to foster innovation within the new Consumer Financial Protection Bureau while also making sure that financial products have a "sufficiently robust" regulatory structure around them. She said the goal is to have a regulatory system that does not choke off financial innovation but encourages those features that will benefit consumers. Many of the traditional banking services are not working for a large number of Americans, leaving large gaps in which products can be developed. "And as they evolve, we obviously want to give them space to evolve but we want to keep an eye on them," she added. The idea is not to impede the emergence of new strategies but to harness their positive aspects and "prohibit, limit or regulate" the more risky side.
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