Major Consumer Groups Sue Director of CFPB for Sucking Up to Financial Industry

The National Association of Consumer Advocates (NACA), United States Public Interest Research Group (USPIRG), and Professor Kathleen Engel have filed a complaint for declaratory and injunctive relief against Kathleen Kraninger as Director of the Consumer Financial Protection Bureau (CFPB).

The issue alleged in the complaint is that the CFPB has stacked the deck when it comes to the Federal Consumer Financial Law Taskforce. It is said “The CFPB claims to have established the Taskforce to obtain recommendations about how to improve and strengthen consumer financial laws and regulations. The Taskforce’s objective therefore goes to the heart of the Bureau’s mission—and positions the Taskforce to provide a blueprint for the CFPB to revise the laws that protect financial consumers across the United States.”

Honestly, if I was an organization that represented the interests of consumers, I’d be pretty pissed of as well if the facts the Plaintiffs state are found to be true.

According to the complaint the Chairman of the Taskforce, Todd Zywicki, is alleged to be a real dick. And if the following is true, the Plaintiffs might be right.

“Indeed, the Chairman of the Taskforce, Todd Zywicki, believes that consumer protections are paternalistic, has argued that the CFPB is a “menace” “guarantee[d]” to manifest “bureaucratic pathologies,”1 and has worked on behalf of several large financial institutions to influence the Bureau and other agencies. All of his fellow Taskforce members have either expressed similar views or continue to work as industry consultants or lawyers.”

But that’s not all.

The Plaintiff consumer advocates say the Taskforce must make their meetings open to the public, be transparent, and prevent private interests from members of the appointed Taskforce from shaping policies.

The complaint states “And since its creation, Defendants have operated the Taskforce in secrecy: the Taskforce has already held closed-session meetings without providing any notice to the public. Nor has the Taskforce made available any of the records related to those meetings or its other work.”

See also  NACA Saved Blanca, Can They Save Your Home as Well?

The intention of the complaint filed with the Court is “To stop these ongoing violations before they facilitate a biased set of recommendations generated in secrecy, Plaintiffs respectfully request that the Court issue an order setting aside the Taskforce’s charter, enjoining it from continuing its work, requiring it to make all Taskforce records available to the public, and barring Defendants from accepting advice or recommendations from the Taskforce.”

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

The description of appointed members of the Taskforce reads like a bad movie.

Todd Zywicki – “In 2009, Mr. Zywicki adamantly opposed the CFPB’s creation, arguing that the financial crisis was “not a crisis of consumer protection” and that regulating consumer financial products would have “unintended consequences,” such as stifling innovation and potentially “undermin[ing] the soundness of financial institutions.” “He has also worked as the Director of the Global Economics Group—a consulting firm hired by Visa, Bank of America, and Citigroup to influence the Bureau and other regulatory agencies—and worked to defend Morgan Drexen, a debt relief company, from a Bureau investigation.”

Howard Beales – Like Mr. Zywicki, Dr. Beales works for a consulting firm hired by industry, and previously been sued by the Bureau for servicing and collecting on loans with interest rates up to recently provided his services to a payday lender in bankruptcy proceedings, who had 448 percent that were void under state law. In that capacity, he has argued that such loans were
not “predatory,” but were instead “beneficial to consumers.”

Thomas Durkin – Thomas Durkin has partnered with Mr. Zywicki to author a book, academic articles, and op-eds that advocate for the rollback of financial regulation in favor of payday loans and other dangerous financial products. For example, in an op-ed titled Why Everything Elizabeth Warren Told You About Consumer Credit Is Wrong, Mr. Durkin and Mr. Zywicki argue that payday loans are “legal, high-cost [credit] options,” that benefit consumers, while protective regulations of such loans are “paternalistic” and “make credit more expensive and less available.”

See also  Consumer Groups Call on CFPB to Provide Easy Access to Complaints Filed Against Companies

William MacLeod – “is a partner at Kelley Drye, where he “[fights] onerous regulations” and defends corporations from government investigations.”

Jean Noonan – “is a partner at Hudson Cook, a law firm that primarily serves clients in the banking and consumer financial services industry.
In that capacity, she represents consumer financial services companies, including payday lenders, who have been investigated and sued by the Bureau for predatory anti-competitive practices.”

“None of the selected Taskforce members has a background advocating for consumers, nor does any appear to believe that the CFPB should vigorously protect consumers from dangerous and confusing financial products.”

If the following allegation is true, it would really suck. The complaint states, “In sum, Defendants have set up a Taskforce that is comprised wholly of members who have either publicly criticized consumer protections as paternalistic and harmful to industry or who have historically represented industry interests. The makeup of the Taskforce excludes any representation of advocates committed to ensuring that consumers are protected from dangerous financial products.”

Loader Loading...
EAD Logo Taking too long?

Reload Reload document
| Open Open in new tab
Follow Me
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
Steve Rhode
Follow Me