Kathleen Kraninger, the current director of the Consumer Financial Protection Bureau, told an audience of bankers at a November 2019 industry gathering that “you are really helping drive the agenda.” Unfortunately for the public and for consumer financial protection, the Kraninger agenda and the Wall Street lobby’s agenda are indeed all too similar. Since the Senate confirmed Kraninger on a party-line vote, she has steered the CFPB in an anti-consumer direction, making it easier for Wall Street and predatory lenders to rip people off and to discriminate against people of color.
In August regulators issued a rule that dramatically weakened the Volcker Rule limits on direct proprietary trading by banks. Today, they have proposed new changes that would greatly weaken restrictions on banks taking risks through ownership of external funds, including venture capital funds and securitization vehicles like collateralized debt obligations.
Yesterday, the House passed the Comprehensive Credit Reporting Enhancement, Disclosure, Innovation, and Transparency Act of 2020 (Comprehensive CREDIT Act), H.R. 3621, in a 221-189 vote.
AFR Education Fund wrote a letter to banking regulators urging them to maintain risk controls for derivatives transactions at large banks Download the letter here. January 23, 2020 RE: Margin and Capital Requirements for Covered Swaps Entities (OCC Docket ID OCC–2019– 0023; Federal Reserve Docket No. R–1682; FDIC RIN 3064-AF08) To Whom It May
In revising the Volcker Rule’s proprietary trading ban last year, the regulators had already relaxed one component of the limits on investment in funds, clarifying the industry’s ability to do so on behalf of clients. Backing off some of the fund restrictions will “complete the process of neutering the rule,” Marcus Stanley, policy director at Americans for Financial Reform, said in a criticism of the regulators’ actions last year.
While the statement purports to clarify the standard for abusiveness under the law, in fact it inserts a great deal of vagueness, and signals that the CFPB is prepared to give companies a pass when they commit abusive acts. And the Bureau plans to let companies that have used abusive practices off the hook for civil penalties and disgorgement if they acted in good faith—a standard that will be in the eye of the beholder, that will encourage ignorance of the law, and that will require the CFPB to prove a negative.
