In response to the closer alliance between Wall Street and the Trump Administration, protestors staged a marriage between Donald Trump and Wall Street on Valentine’s Day, complete with giant puppets and fake money raining down on the assembled crowd. Act.tv documented Bernie Sanders’ appearance to denounce Trump’s pretense of ‘Draining the Swamp’, and lying about his ties to Wall Street.
The Consumer Financial Protection Bureau was created in the face of industry resistance. With a Republican Congress and President Trump in the White House, it is facing an attack that could be the final blow.
In a joint statement last week, Sen. Ted Cruz and Rep. John Ratcliffe presented the Repeal CFPB Act, which targets Title X of Dodd-Frank. The congressmen claim that if passed, the Act would “free consumers and small businesses from the CFPB’s regulatory blockades and financial activism.” In fact, it would completely eliminate the CFPB as an agency. (Consumerist, Lawmakers Introduce Legislation that would Abolish the CFPB)
Should the efforts of Cruz and Ratcliffe fail, there is still House Financial Services Committee Chairman Jeb Hensarling’s plan to revise his earlier bill with the aim of weakening, if not completely destroy the CFPB and pacify banks by removing some key components of annual stress tests that evaluate how a bank will perform in a financial crisis.
In a memo to lawmakers, Hensarling outlined the details of his plan. In an article last week, Bloomberg News reported some of the specifics from the memo:
Hensarling is seeking to eliminate much of the Consumer Financial Protection Bureau’s regulatory powers, and transform it into a law enforcement agency. The memo proposes the controversial regulator only be able to pass rules that have been mandated by Congress. The plan would further restrict the agency by eliminating its authority to supervise financial firms and doing away with a public database documenting consumer complaints. (Bloomberg News, New GOP Memo Targets Stress Tests, CFPB in Dodd-Frank Changes)
Hensarling’s other proposal addresses the role of the CFPB director. He has asserted his belief that the bureau should be under the supervision of a single director, and that the director should ‘be removable by the President at-will”. (Bloomberg News) Hensarling has also announced his opinion that the current CFPB director should be fired by Trump before his term ends next summer. The Bureau is presently engaged in appealing a court ruling that would permit the President to do exactly that without cause.
You know things have gotten bad for the banking industry when even the bankers themselves are beating up on their own. After the Consumer Financial Protection Bureau (CFPB) announced back in early September that it was fining Wells Fargo nearly $200 million—the largest fine ever levied by the Bureau—for the “widespread illegal practice” of opening dummy accounts, filling them with depositors’ funds without their knowledge or authorization, and then cashing in on the accounts by assessing consumers’ fees and other charges, you could almost hear the bankers of the world collectively throwing up their hands. “Not that Senator Elizabeth Warren needed more ammunition to protect the CFPB,” grumbled Jaret Seiberg of the Cowen Group, a leading financial services company, “but she has it now.” Camden Fine, president of the Independent Community Bankers of America (ICBA), put it even more bluntly. “Wells’ greed has made it much more difficult for ICBA to get much needed regulatory relief,” Fine groused.
An invention of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB was created to rein in the bottom-feeders of the financial community. But the revelation that the largest bank in the world by market capitalization had just been caught with its hand in the cookie jar was not what really bothered Fine and Seiberg. Rather, it was the extraordinarily poor timing of the news that rankled them most of all. On the very same day the CFPB issued its consent order against Wells Fargo, the House Financial Services Committee announced that it would begin hearings on a new piece of legislation, the Financial Choice Act, introduced by Republican Committee Chairman Jeb Hensarling of Texas. Hensarling, one of Wall Street’s most contentedly kept men on Capitol Hill (to the tune of $1.2 million in campaign contributions during the 2016 election cycle alone), drafted the Financial Choice Act in effect to gut or destroy the regulatory provisions put in place by Dodd-Frank, and especially Elizabeth Warren’s brainchild, the CFPB (no wonder, then, that Warren has called the bill “Congressman Hensarling’s wet-kiss to the Wall Street banks”). So when Wells Fargo CEO John Stumpf found himself hauled before the public to confess sheepishly that “we make mistakes,” just as Hensarling was beginning the campaign to bring the Financial Choice Act to a floor vote, the ICBA’s Fine grimly rued the inopportune coincidence: “Much-needed CFPB reform is basically DOA,” he acknowledged by way of a postmortem. A little more than a month later, Stumpf himself was DOA—victim of an unceremonious early retirement package that included a “claw back” of nearly $41 million in previously awarded stock bonuses.
If that turns out to be the fate of the Financial Choice Act as well—which, among other things, would replace the CFPB’s existing “consumer watchdog” executive structure with a bipartisan commission subject to the unpredictable currents of congressional appropriations, while repealing its ability to ban financial products deemed to be abusive—it will not have been the first attempt to curtail the Bureau’s regulatory effectiveness. Nor is it likely to be the last. Ever since the 2010 passage of Dodd-Frank, the CFPB has been a perennial target for the banks and financing companies that fall under its umbrella. And with the ready assistance of hired guns like Hensarling, a proliferating array of industries that manufacture increasingly novel (and frequently quite predatory) financial products, which often remain just outside of that umbrella, have been fighting toothand-nail to keep the CFPB out of its turf.
Take, for instance, the world of for-profit educational companies. A state-subsidized boondoggle of alarming proportions, the degree-mill industry has raked in as much as $32 billion annually in taxpayer dollars in recent years, even as the Department of Education reports that 72 percent of for-profit colleges produce graduates who earn less on average than the typical high school dropout in the overall population. For that dubious honor, another study concluded, the typical University of Phoenix or DeVry graduate leaves school “ripped off, unemployed, and deep in debt,” and six times more likely to default on her student loan than a graduate of a non-profit or public college.
This kind of track record of consumer abuse is exactly what the CFPB was created to address, so it was a salutary development when the Bureau secured a $530 million judgment against Corinthian Colleges, one of the industry’s worst offenders, in the fall of 2015, while forcing Corinthian out of business in the process. A similar outcome resulted when the CFPB went after the ITT Technical Institute, which announced it was closing its doors in September 2016. But when the CFPB attempted to push its regulatory authority still further into the workings of the for-profit education industry, the industry pushed back. Noting that forprofit institutions become eligible to participate in massively lucrative federal financial aid programs by being accredited by a recognized agency, the Bureau issued a civil investigative demand— effectively a comprehensive subpoena preliminary to a full investigation—to the century-old Accrediting Council for Independent Colleges and Schools (ACICS), requesting information on how the process had worked for low-performers like Corinthian.
The ACICS responded by refusing to turn over the requested information, while appealing the CFPB’s demand on the legal grounds that the Bureau was “delving into accreditation oversight, not consumer financing, and is overstepping its bounds into an area that is exclusively under the control of the Department of Education.” Meanwhile, the for-profit educational industry’s political allies swung into action as well. Two powerful Congressional Republicans—Tennessee’s Lamar Alexander, chair of the Senate’s Committee on Health, Education, Labor & Pensions; and Minnesota’s John Kline, chair of the House Committee on Education and the Workforce—sent a scathing letter to CFPB Director Richard Cordray, attacking the Bureau’s “unprecedented overreach” and insisting that it “immediately rescind” the information request.
Alexander and Kline explained their opposition to the CFPB’s move by arguing that “determining the role of accreditors for federal purposes is a congressional responsibility, not yours.” But their unacknowledged connections to the worst offenders in the for-profit college industry surely mattered. Eight of the leading for-profit education corporations, including Corinthian and ITT Tech, have been the subject of state- or federal-level investigations in recent years; Lamar Alexander has received substantial campaign contributions from all eight of them. During the last complete campaign cycle, in 2014, John Kline was among the top three congressional recipients of campaign dollars from five of the eight colleges (or from their ownership groups, if privately held). From three of them, Kline received more campaign contributions than any other individual member of Congress.
The political pressure had its intended effect. In April 2016, a conservative federal judge appointed by George W. Bush denied the CFPB’s civil investigative demand, throwing a significant obstacle in the way of the Bureau’s attempts to extend its watchdog duties into the accreditation process.
The for-profit education racket is not the only place where predatory financial companies and their lackeys on the Hill have been working to impede the Bureau’s more expansive ambitions. In recent months, the CFPB has also been trying to shine a light into the shadowy world of structured settlement purchasing—and with remarkably similar results.
Structured settlement purchasing is one of those ubiquitous industries you have probably never heard of. Recognizable for their familiar “get cash now!” television and radio ads, structured settlement purchasers are companies that give consumers immediate lump sum cash payments at discounted rates, in exchange for future streams of payments usually associated with a settlement in a lawsuit. For instance, Freddie Gray—the Baltimore man whose death while in police custody led to weeks of unrest and trials for six Baltimore police officers— had been the beneficiary of a lead-poisoning settlement when he was a child; by the time he was twenty-three, the Washington Post reported, Gray had sold a Maryland-based financial company called Access Funding $146,000 in future payments, in exchange for just $18,300 in lump sum payouts. And Freddie Gray is far from alone—according to the National Structured Settlements Trade Association, between $8 and $10 billion worth of settlement payments are purchased by companies like Access Funding every year, often at deeply discounted prices that leave desperate consumers like Gray with just pennies on the dollar for what their original settlements would have been worth. After the Post story broke, most of Maryland’s judiciary and the state’s attorney general joined Congressman Elijah Cummings in demanding a deeper investigation into “how private companies make profits buying and selling settlements that are meant to ensure victims have reliable incomes, and how we can best protect vulnerable individuals from predatory and abusive practices.”
The largest player in the structured settlement market, by far, is J. G. Wentworth, a Pennsylvania company that does business across the country under a few different brand names. In September 2015, the CFPB issued a civil investigative demand to J. G. Wentworth, which the company refused to comply with on the dubious grounds that, because the company does not lend money to consumers (i.e., provide them with credit) but rather purchases outright their future payment streams, structured settlement payouts are “not a consumer financial product” and, therefore, outside of the CFPB’s purview. The CFPB rejected J. G. Wentworth’s petition to set aside the information request, but the company still refused to comply, throwing the decision to the courts once again and hoping for a favorable ruling like the one that spared the ACICS.
At this writing, the outcome of the CFPB’s efforts to extend its regulatory oversight into the market for structured settlement purchasing also remains up in the air. And that is exactly why so much of the financial community was so frustrated with the poor timing of the Wells Fargo fiasco. By cutting the CFPB off at the knees, the Financial Choice Act is the banking lobby’s most significant effort yet to roll back the regulatory reforms that emerged from the financial crisis of 2008—a crisis that began, remember, because of the lawless and predatory behavior of an industry selling a particularly ubiquitous consumer product. No wonder, then, that JLL Partners, the private equity firm that has owned a majority stake in J. G. Wentworth since 2006, has given more money to Jeb Hensarling than any other member of Congress in each of the last two election cycles.
Assuming Wells Fargo and their ilk can avoid tripping over their own feet, Hensarling, Alexander, Kline, and the rest of their cronies on the Hill know exactly what they need to do to keep the money flowing.
At last year’s conference on Public Sector Unions, Saqib Bhatti presented on how debt has replaced income in the US economy. As debt skyrocketed, bank profits have soared, but the impacts on other parts of the economy – and particularly public workers – are negative and getting worse.
Sadiq Bhatti is the Executive Director of the ReFund America Project and a Fellow at the Roosevelt Institute. He works on campaigns to rebalance the relationship between Wall Street and local communities.
Since Trump’s election, a number of ‘new’ network and campaigns have sprung up, seemingly out of nowhere. The smallest of these groups has attracted thousands of volunteers in a short period of time. New Labor Forum compiled this list as a resource for those seeking to understand the landscape of this new wave of ‘from below’ activism.
The largest and most prominent of these is of course the recent Women’s March on Washington, which took place this past Saturday. They intend on continuing the mission of the march with actions promoted to their supporters.
It’s true that the ‘newness’ of each group is up for debate; an effort led by Michael Moore might be new, but his personal brand is not. The resource guide based group ‘Indivisible’ is new, but the founding members are congressional staffers who are known quantities to many political insiders. What is new, is that social media and the rapidly accelerating news cycle have made it possible for newly crafted brands to appear out of nowhere and engaged millions in intense, sustained activism in a matter of weeks, leaving established organizations to look for ways to connect in order to remain relevant.
One Hundred Days of Resistance
He is calling for actions during the first 100 days and releasing his new film TrumpLand.
Beau Willimon and Action Group Network
They are creating a national network of Action Groups to foster a ‘culture of change’. Groups are organized by location and issue. (Willimon is a screenwriter for House of Cards.)
Women’s March 10 Actions 100 Days
A continuation of the project started by the Women’s March on Washington. They will post actions to their website over Trump’s first 100 days in office.
‘A practical guide for resisting the Trump Agenda’ written by Congressional staffers. They seem very open to comments and ideas for improving the guide, which is published online.
Democratic Coalition Against Trump
Also known as DCAT, they formed initially to prevent Trump from getting elected. Their new mission is holding the Trump and his administration accountable along with any elected officials who support him.
The Sister District Project
They are working to ensure the voting protections of all American citizens by using the resources of progressive districts.
Trump Resistance Movement
A facebook page dedicated to the peaceful resistance against the intolerance coming from the Trump Administration
Knock Every Door
launching nationwide, volunteer-led canvasses to organize our communities against Trump, starting right after the inauguration on January 20
Rise When We Fall
A citizen watchdog organization enabling Americans to take action against the Trump Administration and Congress, as well as local and state governments.
2 Hours a Week
A community fostering a new level of civic engagement following the 2016 election by offering you 2 hours a week of tangible action.
Swing Districts are places where the winner of the last House of Representatives election was determined by a thin margin. Swing Left helps you find and commit to supporting progressives in your closest Swing District so that you can help ensure we take back the House in 2018.
Organizer’s Roundtable is a people-powered movement that formed in the wake of the 2016 US elections as a response to threats to our communities, our rights, and our freedoms.
LittleSis is the snarky alternative to Big Brother – a way for the little people to watch the powerful. A project of Public Accountability Project, a public watchdog group, LittleSis is a tool for conducting research on corporate power and the wealthy, to track corruption and conflicts of interest.
As the names of cabinet appointments have been made public, LittleSis has been posting reports about the relationships between nominees and corporate entities, to help the public better understand who and what they represent.
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