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Tags: credit | consumer

Scimeca: Time for CFPB to Get Out of Consumers' Way

consumer financial protection bureau images

(Timon Schneider/Dreamstime.com)

By    |   Tuesday, 14 May 2024 02:14 PM EDT

OPINION

The Time for the CFPB to Stop Merely Keeping Up Appearances Is Long Overdue

The cost-of-living keeps rising.

Following years of inflation, consumers are the ones shouldering the majority of the economic burdens, in a way we haven’t seen for decades.

With prices rising nearly as much as the 10 years preceding the coronavirus pandemic, millions of Americans are now resorting to credit just to pay for daily living expenses.

Meanwhile, the so-called top government consumer agency, the Consumer Financial Protection Bureau (CFPB) continues to stand in consumers’ way.

Goods and services now cost, on average, over 17% more than they did in January of 2021, hitting every U.S. consumer right in the wallet.

A recent Federal Reserve Survey of Consumer Expectations found that the ability of an average household to come up with $2,000 to cover an unexpected expense hit a 10-year low.

In fact, a majority of American workers said they could not even pay an emergency expense of $500 or more.

At the same time, U.S. consumers are growing increasingly pessimistic about their ability to access most forms of credit.

A new survey by the American Financial Services Association (AFSA) shows consumer credit conditions have deteriorated in the first quarter of 2024.

All of this begs the question of what the CFPB is doing to ease consumers’ pain.

The sad reality is they are actually aligned in making it worse.

Consumers depend on credit for everything from financing a car to making ends meet when hit with an unexpected or emergency expense.

For some families, borrowing is occasionally necessary to avoid missing payments and incurring late penalties.

Nearly half of Americans depend on credit cards just to cover their essential living expenses. And all people, including the millions of unbanked and underbanked U.S. households, require access to credit.

Credit has long been a critical and foundational financial tool for our entire economy.

Unfortunately, the CFPB’s erratic regulatory processes governing access to credit tend to be announced in blog posts or haphazard press releases instead of clear and consistent guidelines.

This regulatory hodge-podge is making it harder for both lenders and consumers to understand what the actual rules are, stifling lenders ability to provide credit to those who need it most.

It’s time for the CFPB to clean up this mess and allow consumers access to the credit they need.

The CFPB can start by adopting lending rules through the well-established, formal rulemaking process.

Rulemaking includes an opportunity for notice and comment, public questions, a review of underlying data and potential inconsistencies with other laws, as well as an examination of potential impacts on consumers and businesses.

Going through this process to create clear lending rules will benefit both consumer finance companies and their customers, ensuring continued access to credit for lenders of all income levels.

Also worth noting is the CFPB grossly encroaching on consumer privacy by mandating that financial services companies collect customers’ extremely irrelevant and sensitive personal information, such as sexual orientation.

As Sen. John Kennedy, R-La., put it during a congressional hearing, "The customer, particularly in a small town, is going to go, 'Whoa, what does my sexual preference have to do with a loan?'

"And the customer can say, 'I don’t want to answer.' But then [the CFPB is] requiring the bank to tell . . . that they wouldn’t answer. And all of this data is going to go to [the CFPB], and we don’t have the slightest idea how [they’re] going to use it, except [they] say [they’re] going to publish it."

This utter nonsense is just more smoking-gun proof that the CFPB has abandoned consumer interests for an ideological agenda serving no one.

People need access to credit now more than ever. The Consumer Financial Protection Bureau needs to shift its focus to facilitating consumer lending or at the very least getting out of consumers’ and lenders’ way.

Gerard Scimeca is an attorney and chairman of CASE, Consumer Action for a Strong Economy, a free-market oriented consumer organization which he co-founded.

© 2024 Newsmax. All rights reserved.


Politics
The CFPB has abandoned consumer interests for an ideological agenda that serves no one. People need access to credit now more than ever.
credit, consumer
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2024-14-14
Tuesday, 14 May 2024 02:14 PM
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