To Protect Consumers, the BCFP Must Listen to Them

Only one government agency is specifically tasked with consumer protection, in fact, it’s right there in the name — the Bureau of Consumer Financial Protection (BCFP). However, since its inception, the BCFP (formerly known as the CFPB) has been doing a lot more industry targeting than consumer protecting. In fact there is strong evidence that consumer concerns have been systematically ignored. Thankfully, under new leadership, the BCFP has the opportunity to right this wrong.

Established by the Dodd-Frank Act in response to the 2008 financial crash, the BCFP was established as an “independent” agency, outside the review and oversight of Congress, and tasked with protecting American consumers from illicit financial activity. As a financial watchdog, it was supposed to monitor the behaviors of big banks in the hope of preventing another financial collapse. The BCFP was given the authority to issue regulatory rules based on their oversight that would protect consumers from bad financial actors.

As with any federal regulatory rulemaking, a public comment period is essential to ensuring that all sides are heard. From industry, to think-tanks, to governors, to congressional committees, many opinions are gathered on proposed rules — none so important as the comments of consumers. After all, the consumers are the ones who will have to live under the new regulations.

One would think that an agency dedicated to consumer protection would pay special attention to consumer comments, reviewing them thoughtfully and ensuring the opinions of consumers were considered as new regulatory rules were crafted. However, under the leadership of former BCFP director Richard Cordray, ample evidence suggests consumers’ voices were all but ignored.

During the rulemaking process for the bureau’s “Payday, Vehicle Title, and Certain High-Cost Installment Loans Rule,” there were a myriad of issues with the collection, review, and posting of public consumer comments. For starters, there was a delay in the opening of the electronic portal for public comments, limiting the time consumers could write to regulators about their experiences with small-dollar loan products. Next, consumers found that their letters were not being posted in real time — a key provision of a public comment period. According to multiple reports, over 1 million consumer comments had been submitted, however only a fraction were appearing on the website.

These issues set off red flags in Congress and led to a letter from nearly 40 lawmakers asking Director Cordray for an explanation. Their letter asked simply, “To date, how many comments has the Bureau received on the rule, how many of those comments have been published and how much time on average does it take for comments to be published?” Lawmakers went on to ask, “Is there an intent to hide the comments of consumers who support the current state regulatory framework of legal licensed short term lending?”

Lawmakers feared that the bureau was intentionally reviewing comments slowly and not posting them to the online portal. Why might BCFP leaders do that, you ask? Because they knew they had no “consumer protection” argument for the rule they were proposing. In fact, consumers were writing in by the tens of the thousands to express their satisfaction with small-dollar loan products and the need to keep the products in the marketplace. These consumers were ignored, and a rule was published that clearly disregarded the outcry of thousands of consumers.

Thankfully, there is an opportunity to right this wrong. Under the new leadership of Director Mick Mulvaney, the BCFP can choose to listen to consumers and consider their opinions.

To right this previous wrong, Director Mulvaney should extend the compliance date of the Cordray rule, reopen a new rulemaking process and give consumers the opportunity to share their stories — and actually be heard. Mulvaney and the BCFP have a unique opportunity to put consumers first, and they should.

Matthew Kandrach is President of CASE, Consumer Action for a Strong Economy, a free-market oriented consumer advocacy organization.