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Facilitating consumer fraud

Trump administration working to undo consumer protections

Melvin B. Miller
Facilitating consumer fraud
“Man, I feel like Wall Street’s already in my pocket!”

Many Americans have the highest regard for those at the helm of major multibillion dollar corporations. Business success is the realization of the American Dream. There is a general appreciation that the efforts of those taking advantage of the free market system have caused America to become the world’s leading industrial giant. However, too little attention is given to the impact and rights of the American consumer.

While big business no doubt motivates the development of the economy, there is broad agreement among economists that consumer spending generates about 70 percent of the gross domestic product (GDP). The output of American business is to provide products or services for sale to the public or to the federal and state governments. Companies can increase their sales only by attracting new customers or by inducing existing customers to spend more. Competition for sales is fierce.

As technology and financial services have become more complicated, the average consumer has found it more difficult to traverse the complexities and make prudent consumption decisions. In some areas, government regulations provide some protection. For example, the U.S. Food and Drug Administration has regulations to assure that pharmaceuticals are safe and are putatively beneficial, and that food products such as fresh meat have been approved for consumption. Beyond the institutional regulations for financial institutions, there were few protections for consumers involved in financial transactions.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 created the Consumer Financial Protection Bureau with the sole purpose of protecting consumers in transactions with banks and other financial institutions. As might be expected, like other industries, Wall Street and banks have vigorously opposed any regulation. Even the law’s Regulation Z that requires lenders to establish the borrower’s capacity to repay a mortgage has encountered great criticism.

Some of the subjects covered by the Bureau are auto loans, bank accounts and services, credit cards, mortgages, payday loans, prepaid cards, student loans and debt collection. The CFPB receives about 22,000 calls for assistance each month and CFPB rulings have required lenders to reimburse borrowers many millions of dollars. Because of its success, Trump plans to render the bureau ineffective.

Richard Cordray who has led the CFPB since its inception left before the expiration of his contract and has named his assistant Leandra English as acting director until the expiration of his term. However, Trump has replaced her with Mick Mulvaney who is an avowed critic of the CFPB. But Mulvaney, who is also director of the White House Office of Management and Budget, will continue to hold that post until Trump’s permanent appointment is approved by the Senate.

Working-class Americans should be concerned that Trump and his cronies are unwilling to support an organization to protect consumers against being cheated in financial transactions. There are numerous traps to ensnare the unwary. How can sensible Americans side with Trump’s opposition to a program designed to keep consumers safe in the financial marketplace?

Those who still believe that Trump is the champion of the working class, despite the growing evidence to the contrary, are indeed gullible.

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