“Financial education isn’t going to stop a company from misapplying your mortgage payment or the wrongful repossession of a car,” observes Linda Jun, a senior policy counsel at Americans for Financial Reform. “The financial crisis wasn’t about people suddenly forgetting how to save. That was a very minor aspect of what happened. There were these bad actors that preyed on people with deceptive fees and unfair practices and discrimination. The point of having a financial regulator that protects consumers is to bring these shady behaviors to an end.”
“Private equity and hedge funds now wield enormous influence over the American economy, often with terrible consequences for workers and communities,” said Lisa Donner, executive director of Americans for Financial Reform, one of the groups backing the bill, in a statement.
“He was at the center of the industry effort to undo Dodd-Frank in the back rooms, and in terms of intimidating regulators and overturning important parts of it, he had a lot of success,” recalled Marcus Stanley, policy director of Americans for Financial Reform, a group that supports the law.
“Most of the rules that were costing industry a lot of money, he was the lead on trying to overturn them,” Stanley added.
Consumer advocates criticized Ms. Kraninger’s invitation to financial companies. “Americans don’t need the main federal consumer protection agency partnering with the financial services industry to conduct studies,” said Linda Jun, senior policy counsel at Americans for Financial Reform. “Americans need a strong CFPB that actually polices the industry from doing harm.”
Marcus Stanley, policy director at Americans for Financial Reform, said that there is a widespread feeling that the MSRB is dominated by insiders to a degree that is “greater than is healthy for a self regulatory organization. Reforms are called for and I’m glad that Sen. Kennedy is stepping forward to do that.”
He said he sees bipartisan interest in the bill because people have interest in federal regulation in the municipal markets.
“We’ve seen blowups in the muni markets that have really affected cities and public entities across the country,” Stanley said, referencing Detroit and Puerto Rico.
“We are deeply concerned that the reductions in resolution planning requirements proposed here would have an adverse effect on the financial stability of the United States and possibly also on the safety and soundness of individual banks,” Americans for Financial Reform said in its letter.
“Loosening this regulation is a straight-up giveaway to the biggest Wall Street banks whose high-risk trading activities got us all into deep trouble in 2008,” Carter Dougherty, a spokesperson for Americans for Financial Reform, told Sludge. “This rule is critical for protecting bank affiliates that handle customer deposits.”
Kathleen Kraninger, who has helmed CFPB for a scant four months, is unfortunately already making a name for herself as someone willing to let the bad guys off the hook. She is a protégé of Mick Mulvaney, who spent much of 2018 doing his best to lay waste to the CFPB’s work and structure as its acting director.
Trump-appointed regulators came into office saying they would pare back Wall Street’s postcrisis rulebook. More than two years into the administration’s tenure, most of the work remains unfinished, particularly for the biggest banks.