Consumer advocates are livid in their denunciation of a report by the U.S. Treasury Department that recommends dismantling the Consumer Financial Protection Bureau (CFPB) and rolling back many of the regulations imposed on the financial services industry in the Dodd-Frank Act of 2010.
"Dodd-Frank significantly changed the federal financial regulatory landscape, imposed new requirements on a broad array of U.S. financial institutions, prescribed more than 390 agency rulemaking requirements, and mandated 67 studies by various federal entities. The net result of Dodd-Frank has been the largest and most complex increase in financial regulation in modern times," the report asserts.
Treasury Secretary Steven T. Mnuchin said his goal is to reduce unnecessary regulations.
“We are focused on encouraging a market environment where consumers have more choices, access to capital and safe loan products – while ensuring taxpayer-funded bailouts are truly a thing of the past,” Mnuchin said as he released the report yesterday.
"Most ominous sign yet"
“This is the most ominous sign yet that Republicans will stop at nothing in their quest to eliminate important protections from Wall Street fraud and recklessness put in place after the 2008 economic collapse," said Karl Frisch, executive director of Allied Progress, a liberal advocacy group. "Mnuchin would give Wall Street free reign to gamble with our economy while gutting the Consumer Bureau and leaving hard-working families nearly defenseless against predatory financial institutions."
Mnuchin said the recommendations are intended to relieve banks, mortgage lenders, and others from the supposedly oppressive regulations that business interests say have stifled the economy.
“Properly structuring regulation of the U.S. financial system is critical to achieve the administration’s goal of sustained economic growth and to create opportunities for all Americans to benefit from a stronger economy,” said Mnuchin.
Mnuchin said that over a four-month series of meetings with stakeholders, Treasury officials got "a very clear picture of redundancy, fragmentation, and inefficiency in our regulatory framework."
The report echoes many of the provisions of the Financial CHOICE Act, already passed by the House, but asserts that many of the recommendations can be made through regulatory changes and executive actions without waiting for Congressional action.
But Yana Miles of the Center for Responsible Lending said the provisions Mnuchin calls overly restrictive were enacted in response to the financial meltdown of 2008, which many blamed on recklessness by the financial services industry.
“The Dodd-Frank law established reasonable safeguards against dangerous financial practices, such as protection from toxic mortgage loans, and established a consumer agency that serves as our nation’s watch dog on Wall Street," Miles said.
"Since its establishment, the CFPB has returned nearly $12 billion in relief to more than 29 million people who’ve suffered at the hands of big banks like Wells Fargo, for-profit colleges like ITT Tech, car-title and payday lenders, credit card companies, and other financial institutions. Any attempt to roll back these measures, as the Treasury Department suggests, would be a disservice to working families," Miles said in an email.
"The Treasury’s comments and recommendations is a warning sign of a return to those dark days.”
The report is expected to be used by the Trump Administration as the blueprint for a series of executive orders, although no firm timetable has been made public.