Treasury Chief: Consumer Agency’s Track Record Should Silence Critics Who Wanted It Gone
Lew praises CFPB as Washington prepares to mark fifth anniversary of Dodd-Frank financial reform law.
The Consumer Financial Protection Bureau, which after five years remains in the cross-hairs of Republican critics, has earned an end to calls for its abolition, Treasury Secretary Jack Lew said on Wednesday.
“The CFBP is doing important work and was protected with independent funding,” Lew told a Brookings Institution audience after a speech marking this month’s fifth anniversary of the 2010 Dodd-Frank Financial Reform Act. “Those who have concerns should see that the bureau has broad overwhelming support and has done everything in a careful way, listening to all sides. Its track record should be enough to put all that to rest.”
Lew praised the consumer watchdog agency’s “ground-breaking protections” on student loans, credit card transparency and simplified mortgage agreements. “It is holding companies accountable,” having returned $5.3 billion to 15 million consumers who were harmed by financial services providers, he said, citing as an example a credit card company charge of $15 for providing cardholders with paper statements.
In Lew’s larger talk on Dodd-Frank, he said the controversial law enacted during the financial crisis of President Obama’s first term “is working, and most financial institutions, after years of trying to repeal it, have now adjusted.” He stressed its improvements in economic stability and transparency to reduce “excessive risks” by banks, and the law’s protections for consumers, institutions and investors. “Pressures to weaken the rules of the road will increase, and it would be a great mistake to assume that banks are self-regulating and that excessive risk is a thing of the past,” he said. “Wall Street can still harm Main Street. We can’t know when the next financial crisis will come, so we must face the tasks ahead with a sense of urgency.”
Dodd-Frank, he said, “is more than a law, it’s a commitment.”
Lew spoke as a new poll commissioned by the nonprofit coalition Americans for Financial Reform and the Center for Responsible Lending found that nearly three-quarters of likely 2016 voters (73 percent) favor the central reforms in Dodd-Frank.
Support for the CFPB in particular also remained in the 75 percent range, across party lines, the pollsters said. “Seventy-two percent support the CFPB’s enforcement actions against Bank of America and GE Capital, in preference to an argument calling the CFPB out of control, and accusing it of costing American jobs and taxpayer money (17 percent agree).”
The Republican-controlled Congress, meanwhile, is scheduled to continue its scrutiny of the law and the bureau. Sen. Richard Shelby, R-Ala., chairman of the Banking, Housing and Urban Affairs Committee, is challenging Lew’s upbeat assessment with his pursuit of the Financial Regulatory Improvement Act that would relieve banks and credit unions of a specified size from “unnecessary regulatory burdens.” He is planning a July 15 grilling of CFPB Director Richard Cordray on the agency’s semiannual report.
On the House side, Financial Services Committee Chairman Jeb Hensarling, R-Texas, held a hearing on June 26 examining “discrimination and retaliation” against some CFPB employees based on whistleblower allegations of a “toxic workplace.” He plans a hearing with private-sector witnesses this Thursday titled, “The Dodd-Frank Act Five Years Later: Are We More Stable?”
Hensarling is also scheduled to speak on July 21 at the American Enterprise Institute, in a talk titled, “Dodd-Frank’s Unhappy Fifth Birthday.”