Calling the new Consumer Financial Protection Bureau an “ambitious sheriff,” the Associated Press takes an in-depth look into the Consumer Financial Protection Bureau this week. Noting its “dozens” of enforcement probes, more than 100 subpoenas, data, testimony and marketing materials, the AP reported on more than two dozen interviews with agency officials and industry executives in order to look into the CFPB behind the scenes.
What it found: Many companies, including banks, payday lenders and credit card companies are having to adjust to the ways of the new agency.
The AP writes:
The bureau’s champions – mainly Democrats and consumer advocates – won, and in July 2011 it took over enforcement of 18 existing consumer laws. Since then, it has used a range of powers to clamp down on what it calls problematic lending, misleading marketing and secret deals between companies that end up costing consumers.
The bureau can’t indict people or companies criminally; it refers possible criminal cases to the Department of Justice.
Still, the agency’s office of enforcement wields a potent tool: the threat of civil charges against violators of consumer laws involving money transfers, foreclosures, payday loans and virtually every other financial product or service used by consumers.
Companies that inhabit these financial backwaters have never faced strict, ongoing oversight by federal officials. They say they feel dragged down by the costs of responding to the investigations.
For some banks and industrial lenders, the new oversight may be so costly that they stop offering some products, says Bill Himpler, vice president of the American Financial Services Association, a trade group for card companies, mortgage lenders and finance companies. He says the bureau’s tactics put companies on the defensive.
“It doesn’t leave somebody with the best feeling that what they’re trying to do is ensure compliance so much as create a gotcha situation,” Himpler says.
Kent Markus, who heads up the bureau’s enforcement office, says the costs are necessary to make sure companies aren’t preying on consumers. “We want to make it more expensive to break the law than to abide by it,” he says.
Written by Elizabeth Ecker