Most of the $4.1 million Wells Fargo is going to pay in relief and penalties to the federal government for illegal fees and others practices connected to the handling of private student loans is going to the Consumer Finance Protection Bureau, with just over $400,000 going in relief to borrowers. But that’s fine. The penalties are designed to get the attention of big banks whose practices, intentional or careless, hurt average consumers.
That was the idea behind the creation of the CFPB in the wake of the Great Recession, and incredibly, even after that catastrophic near-collapse of the nation’s economy, Republicans fought against it, especially against the idea of naming now-Sen. Elizabeth Warren of Harvard as the head of it. And today, GOP leaders still would like to abolish the CFPB as unnecessary, just as they’d like to eliminate other oversights of big banks, which would apparently like the chance to run the country to the brink again.
The penalties for Wells resulted in no admission of wrongdoing by the bank, which has said it eliminated procedures that resulted in some borrowers being charged incorrect late fees, the processing of payments to boost fees and the failure to correct inaccurate information filed with credit reporting agencies. Those kinds of things may not mean much to a mega-bank, but those kinds of actions can have serious consequences for average people trying to protect their credit.
The CFPB is doing good work trying to prevent abuses of consumers. Discover Bank last year was ordered to pay $18 million in refunds and penalties after the consumer bureau said it found different illegal practices.
If anything, consumers need more protection, and not to be left to the mercy of big banks, which have come back nicely after the near-disaster of 2008, when many were happy to accept bailouts and rescue from, in effect, American taxpayers. And while they didn’t go gentle into a new world of more oversight, they didn’t put up much of a fight following the Great Recession.
Now, though, with Republicans in control of Congress, the Obama administration finds itself in an almost constant battle to keep financial regulations in place. It’s a case of Republicans not having learned a thing from the Recession, which came about at least in part because of inadequate regulation that made it possible for the gamblers on Wall Street to win big — and then, to lose big and just about take the American economy with them.
Rather than learn from their mistakes, those big players whine that their prosperity — which they equate with the country’s prosperity, of course — is being held back by unnecessary regulation. It’s a preposterous example of greed and selfishness.
Standing in the way of it is the Consumer Finance Protection Bureau, one of the few friends consumers, average folks, seem to have. The CFPB needs to be expanded, add more muscle and put a tighter grip on the Wall Street powers. Period.