US Senator Elizabeth Warren (left), Democrat from Massachusetts, attends a protest rally against Donald Trump administration's anticipated plan to close the Consumer Financial Protection Bureau in front of the bureau's headquarters in Washington, DC, on Monday. SAUL LOEB/AFP
WASHINGTON — The Donald Trump administration's rapid dismantling of the US consumer protection watchdog will have broad implications for consumers with credit cards, mortgages and bank accounts, leaving people with little recourse if they are unfairly treated by financial institutions, experts say.
The US Consumer Financial Protection Bureau, or CFPB, was defanged over the weekend by Trump administration appointees after Russell Vought, the agency's acting chief, ordered the staff to halt work and temporarily locked the doors to its headquarters.
As a result, the job of policing a wide range of financial firms for compliance with several consumer protection laws has functionally disappeared — one that has been a mainstay since the agency was created by the US Congress in 2010 in response to the 2008 financial crisis.
"The Trump administration just hung out a sign saying, 'Cops on break' in the financial services sector," said Aaron Klein, a senior fellow at the Brookings Institution think tank, who was at the Treasury Department when the law creating the CFPB was drafted.
On Monday, the White House criticized the agency as a "woke, weaponized arm of the bureaucracy" that should be reined in immediately.
The CFPB enforces a spate of consumer financial protection laws. Those include laws that safeguard active-duty military members from predatory lending practices, protect US citizens from inaccurate credit billing and prohibit creditors from discriminating against applicants based on their religion or race.
Beyond enforcing existing laws, the CFPB has also imposed limits on overdraft fees, banned medical debt from being listed on credit reports and promulgated rules to prevent brokers from selling consumers' sensitive data. The agency also collects consumer complaints against financial companies and provides financial education services.
Eliminating the agency — or even handicapping it — would mean that no one would be policing the nation's largest financial firms to ensure that they are complying with those rules, according to experts.
Dennis Kelleher, president and CEO of Better Markets, which advocates for stricter government oversight of the financial sector, said that low-income consumers will likely feel the lack of CFPB protections the most.
"There's a chain effect of sorts, especially among lower-income borrowers," said Kelleher.
Agencies Via Xinhua
