CHOICE Act leaves consumers vulnerable to financial fraud and rip-offs
May 4, 2017
WASHINGTON, D.C. – The House Financial Services Committee approved legislation today that severely weakens the Consumer Financial Protection Bureau and puts consumers at risk of unfair and abusive financial practices, according to Consumers Union, the policy and mobilization division of Consumer Reports. The Financial CHOICE Act, sponsored by Representative Jeb Hensarling (TX), is expected to be voted on by the full House of Representatives later this month.
“Congress created the CFPB to ensure consumers get a fair deal and to protect them from predatory practices that can undermine their financial security,” said Pamela Banks, senior policy counsel for Consumers Union. “But now supporters of the CHOICE Act seem more intent on protecting the financial interests of the big banks and shady lenders than working families. This bill strips the CFPB of most of its power and would leave consumers vulnerable to fraud, hidden fees and costly gotchas by banks and unscrupulous financial firms.”
Representative Hensarling’s Financial CHOICE Act would eliminate the CFPB’s authority to supervise banks, credit reporting agencies, and payday lenders. The watchdog would lose its ability to stop unfair, deceptive, and abusive practices. The bill even blocks the CFPB’s authority to conduct education campaigns to help consumers make smarter financial decisions and would prevent the CFPB from making public the complaints it collects from consumers who have been mistreated by financial institutions.
Under the bill, the CFPB would also lose its crucial independence from banking industry control. The CFPB’s director could be fired at will by the President, unlike other banking regulators, and the agency’s budget would be subject to the annual congressional appropriations process, opening it up to further attack by financial industry lobbyists and other opponents determined to undermine the agency and shrink its budget.
The CFPB was established as part of the measures passed by Congress in the wake of the 2008 financial crisis. The Bureau works to ensure consumers are treated fairly by establishing basic standards that banks and other financial companies must follow and by policing abuses in the marketplace. Since the CFPB opened its doors in 2011, it has won almost $12 billion in refunds and relief for an estimated 29 million Americans who’ve been defrauded by financial companies.