The time has come to consider an official name change for the Consumer Financial Protection Bureau to reflect its true mission under the Trump administration. Consumers are clearly the last thing on President Donald Trump's mind, and the only people he and his GOP supporters in Congress seek to protect financially are the fat cats in the banking and payday lending industry.
We'd offer a few recommendations for replacement names, but unfortunately, their acronyms are unprintable in a family newspaper. Suffice it to say that the new name should reflect the truth that consumers, especially those on the edges of poverty, are getting the shaft under the broader freedoms Trump plans to give the financial services industry.
Having already reduced the CFPB's banking oversight powers, the bureau now plans to abolish most consumer protections that had restricted exploitative payday lending practices.
Payday lenders offer short-term loans at effective interest rates of up to 400 percent. Before an Obama administration crackdown, lenders did little to verify borrowers' ability to repay. If borrowers had trouble making payments, lenders rolled over their loans with jacked-up fees that quickly pushed borrowers into a cycle of crushing debt.
Under Obama, the CFPB significantly tightened rules, prompting payday lenders' complaints about reduced profit margins. Payday lenders spent $3.47 million lobbying Congress last year in ongoing efforts to roll back laws designed to curtail the irresponsible financial practices that prompted the 2007-2008 recession.
According to OpenSecrets.org, Republican Reps. Ann Wagner and Blaine Luetkemeyer of Missouri ranked among the top 20 congressional recipients of donations from payday lenders. Both serve on the House Financial Services Committee. Of the $2.5 million payday lenders donated to candidates, parties or outside political-action groups, 89 percent benefited Republicans.
After ousting CFPB's longtime director, Trump has been in a nearly two-year search for a permanent CFPB director — apparently looking for someone so inexperienced that she wouldn't know the first thing about interfering with payday lenders' profit margins. Kathy Kraninger fit the bill, having no previous background in financial industry regulation.
Barely two months in office, Kraninger proposes to eliminate checks on borrowers' credit worthiness — that is, their ability to pay — along with limits on the number of loans that can be rolled over.
Linda Jun, of the consumer-advocacy group Americans for Financial Reform, says the overhaul is "disturbing, but not surprising," The Washington Post reported, because the industry "thrives on being able to do whatever it wants. That is their business model, to have zero standards."
Trump already has a demonstrable track record of serving the interests of the already rich at the expense of those on the lower end of the pay scale. With enablers like Wagner and Luetkemeyer backing these radical rollbacks, who knows what new financial frontiers are next to be exploited?
REPRINTED FROM THE ST. LOUIS POST-DISPATCH