The Consumer Financial Protection Bureau (CFPB) is the sole federal agency dedicated to enforcing federal consumer financial laws and protecting consumers from unfair, deceptive or abusive financial products or practices. Since 2011, the CFPB has stood up against bad-acting, law breaking financial institutions that take advantage of ordinary people working to stay afloat in our evolving financial system. But the Supreme Court will soon hear a case that could leave consumers high and dry and invite more costly financial crises.
We witnessed what happened before the U.S. had a strong agency dedicated to protecting consumers when 15 years ago, our nation’s economy was rocked by the abrupt collapse of the investment bank, Lehman Brothers.
For years, Wall Street banks like Lehman bundled up predatory mortgage loans that families could not afford and sold them to investors. In 2008, this house of cards came tumbling down, beginning the worst financial disaster since the Great Depression and a lasting nightmare for families everywhere. In response, Congress created the CFPB, but this agency’s very existence will soon be decided by the Supreme Court.
During the 2008 financial crisis, we watched as Americans lost their retirement nest eggs, their jobs and their homes. In fact, as many as 10 million Americans lost their homes, nearly 9 million people lost their jobs, and within four years, 46.5 million Americans were living in poverty. And as with most crises, Black communities and other communities of color bore the brunt of the economic pain.
Greed at the hands of predatory lenders and Wall Street banks crippled our economy, from mortgage brokers who swindled families by pushing “no doc” mortgages they could not afford, to the Wall Street titans who hid catastrophic risks with complex financial instruments like collateralized debt obligations and credit default swaps.
Even as families were being foreclosed on or fired, wealthy executives rewarded themselves with excessive pay and bonuses. Unfortunately, there was no federal watchdog focused solely on protecting consumers from Wall Street’s recklessness.
As a member of the House Financial Services Committee during this crisis, I was outraged by the behavior of Wall Street and these predatory lenders, and that not a single executive was held accountable while taxpayers were forced to foot the bill and bail out the banks.
That’s why I helped lead the legislative response to this crisis by pushing for the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act. In addition to ending future bank bailouts, this historic law created the CFPB. So far, the CFPB has returned an astounding $17 billion to 200 million consumers harmed by financial institutions.
Despite the agency’s success at protecting consumers, this year’s anniversary of the crisis is particularly significant as Republicans ramp up their attacks against the agency. Next month, the Supreme Court will hear oral arguments in CFPB v. Community Financial Services Association of America. Extreme Republicans and predatory payday lenders have teamed up to challenge the constitutionality of the CFPB’s funding based on a fringe legal theory.
Let’s be clear, every single court — other than the radical 5th U.S. Circuit Court of Appeals — has affirmed the validity of CFPB’s funding. But just like MAGA Republicans who continue to deny election results, they continue to deny these facts as well.
The Constitution is clear: Congress can fund the executive branch, including the CFPB, banking regulators and other agencies however it likes, and has done so for nearly 250 years. This attack on the CFPB is another destructive effort by Republicans to undermine all types of essential government programs like Social Security and Medicare.
Still, the CFPB’s record speaks for itself. Under Director Rohit Chopra, the CFPB is successfully combatting junk fees, relieving the burden of medical debt on consumers’ credit reports, fighting back against housing discrimination and redlining, and holding big banks accountable for repeatedly breaking the law and harming consumers. That’s why 80 percent of people, including 75 percent of Republicans, support the CFPB and want the agency to continue its job. Republicans should listen to their constituents, who know from experience what a junk fee is and can explain why they need to support the agency’s work.
I still hear from constituents who bear the scars of the financial crisis. For this reason, we need to defend the only agency dedicated to protecting consumers. Earlier this year, I worked with Sen. Sherrod Brown (D-Ohio) to lead 144 current and former congressional members in sending a brief to the Supreme Court, describing why Congress created the CFPB and how the Fifth Circuit’s opinion was wrong.
Come October, the Supreme Court must choose whether it will side with our nation’s consumers and the rule of law or with predatory lenders and their allies. No one in this country should have to be the prey again of Wall Street’s greed.
Maxine Waters is ranking member House Financial Services Committee.
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