Consumers Union Warns That The CFPB’s Future Ability to Uncover And Stop Shady Financial Practices Is In Jeopardy
WASHINGTON, D.C. (April 20, 2018)– The Consumer Financial Protection Bureau (CFPB) and Office of the Comptroller of the Currency (OCC) announced today that they are imposing a $1 billion fine on Wells Fargo for abusive lending practices, including charging customers for auto insurance they didn’t need. Consumers Union, the advocacy division of Consumer Reports, applauded the announcement but warned that recent steps taken by Mick Mulvaney, acting director of the CFPB, will undermine its ability to hold banks and other financial firms accountable for their misdeeds.
“It’s been clear for a long time that Wells Fargo has been playing fast and loose with the rules and taking advantage of its customers,” said Pamela Banks, senior policy counsel for Consumers Union. “Wells Fargo has become the poster child for why consumers need a strong watchdog in Washington keeping an eye out for unscrupulous banking practices and other financial scams. Today’s billion dollar fine is an important development and a fitting penalty given the severity of Wells Fargo’s fraudulent and abusive practices.”
But Banks warned, “You can’t stop lawbreakers if you aren’t looking for them. The CFPB’s future ability to uncover and stop financial rip-offs is being seriously compromised by Mulvaney’s push to ease investigations of the financial industry. We need to maintain vigorous oversight and full enforcement of the law to protect consumers from shady banking practices.”
The $1 billion penalty against Wells Fargo is the first enforcement action announced by the CFPB since Mulvaney took over as acting director in late November. Wells Fargo reportedly acknowledged its wrongdoing in this case last summer when Richard Cordray was the director of the CFPB. Under Mulvaney, the CFPB has pulled back on investigations and enforcement actions, including efforts to go after payday lenders charging interest rates as high as 950 percent.
Mulvaney plans to delay and reconsider the CFPB’s new rules that protect consumers who take payday and auto title loans and has turned the agency’s mission on its head by emphasizing deregulation of the financial industry as a top priority. Earlier this year, Mulvaney moved the Office of Fair Lending out of the Enforcement Division, raising concerns that the CFPB will not take aggressive action against lenders who discriminate against borrowers. The Trump administration has also proposed shrinking the CFPB’s budget and putting its guaranteed funding at risk by subjecting it to the annual congressional appropriations process.
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Michael McCauley, mmccauley@consumer.org, 415-902-9537 (cell) or 415-431-6747, ext 7606