Consumer Law & Policy Blog

Ira Rheingold Op-Ed on Wells Fargo and a Different Arbitration Dispute

by Jeff Sovern

Different, that is, from arbitrations over the unauthorized accounts, about which we have reported (Wells has agreed to set aside its arbitration clause in the unauthorized account dispute and settle the claims in a class action; court approval is pending but seems likely). Ira's piece, titled Courts, Regulators Must Stop Wells Fargo’s Rigged Arbitration System appears in the Morning Consult. Excerpt:

The 11th Circuit Court of Appeals is scheduled to hear arguments in August over Wells Fargo’s abusive overdraft fee practices. Not content to rake in the profits at up to $35 per fee, banks like Wells Fargo began a deeply cynical and abusive practice: By re-ordering a customers’ transactions, banks could ensure the largest-dollar items were charged to your account first, resulting in additional fees when lower-dollar transactions, which had been completed earlier, hit your empty bank account. Instead of being charged one overdraft fee, you would be hit with several * * *

* * *

Wells Fargo, on the other hand, refuses to reimburse its customers. Instead, the bank has spent years trying to force its customers into a complicated arbitration process, which would in reality provide little chance of recovering the money that was stolen through these overdraft fees.

 

 

 

Who Is Jeffrey Joseph, CFPB Critic?

by Jeff Sovern

Last month, Jeffrey Joseph posted Tyrannical CFPB tarnishes July 4th holiday in The Hill. Well, ok; others have so claimed, including House Financial Services Chair Jeb Hensarling. Joseph is described at the end of the op-ed only as "a business professor at the George Washington University School of Business."  I was curious to see what Professor Joseph's background was, so I went to the GW web site. But I couldn't find his bio there.  It seems that GW posts only the bios of full-time professors, and not adjuncts.  Adjuncts provide valuable instruction, but often an adjunct professor has another affiliation which is full-time and considered of greater significance than a part-time teaching gig, and so more worthy of listing in an op-ed.  Perhaps Professor Joseph doesn't (he could be retired or independently wealthy, for example). In most cases, this wouldn't matter, because if Professor Joseph's arguments are well-taken, his background is irrelevant; it's the argument that counts, after all.  But the text of Professor Joseph's op-ed has been challenged.  For example, after Professor Joseph described the Center for Responsible Lending as having "expressed concern about the {CFPB's] dictatorial leadership structure," CRL head Michael Calhoun posted his own op-ed in The Hill, CFPB protects Americans from predatory loan sharks, accusing Joseph as having taken Calhoun's words out of context and mischaracterizing them.  Calhoun also pointed out that Joseph discussed the PHH panel decision without noting that it has been vacated by the D.C. Circuit. Along the way, Calhoun effectively defends the CFPB from the current attacks on it.

As Joseph's title implies, much of his piece is taken up by the CFPB's structure, but he also uses the CFPB's payday regulation as his only example, of, as he puts it "the CFPB’s judicious rulemaking which has carried billions of dollars in costs. Take payday loans: The CFPB now requires payday lenders—the issuers of short-term loans to low-income borrowers—to verify a borrower’s income, major financial obligations, and borrowing history before issuing any loan." Except that, unless I have missed something, the CFPB has not actually issued a payday rule.  True, it has proposed one, but until the Bureau issues its rule, we won't know what its effect will be.

I still wonder what Joseph's background is. 

USA Today Editorial: Republicans side with banks over consumers

by Jeff Sovern

Here.  Excerpt:

Faced with a choice between helping their constituents or helping themselves to a campaign donation haul, House Republicans are siding with deep pockets.

All but one of the House’s 234 Republicans voted last month to gut a powerful agency — the Consumer Financial Protection Bureau — that banks, credit card issuers, debt collectors and other financial players have been seeking to weaken for years. No Democrats voted in favor of the measure.

These special interests routinely shower lawmakers with campaign cash: Commercial banks and their trade association political action committees (PACs) gave Republicans running for federal office in 2016 more than $9 million, nearly 75% of their total giving. Finance and credit company PACs handed over $2.8 million to GOP candidates.

Richard Hunt of the Consumer Bankers Association has an opposing column here. His column focuses on the CFPB's structure and doesn't address the content of the Financial Choice Act, which the USA Today editorial discusses.

Appropriations Bill That Would Harm the CFPB and Consumers Passes House Appropriations Subcommittee

by Jeff Sovern

Next stop should be the full committee, then the House floor. 

The House Appropriations Bill Is Much Worse for Consumers Than Originally Reported

by Jeff Sovern

We posted yesterday about the House Appropriations Bill. I haven't studied the bill, but on a quick look, it contains a number of objectionable provisions from the Financial Choice Act (already passed by the House), including repeal of the CFPB's power to regulate arbitration and payday lenders and to block conduct on the ground that it is deceptive, unfair, or abusive (UDAAP authority). It also eliminates the Bureau's supervisory authority.  More from Law360's Evan Weinberger here. By attaching these provisions to the appropriations bill, which is very likely to pass in at least some form, their supporters increase their chances of getting something through Congress, even if the Financial Choice Act fails of passage.

More on the House Appropriations Bill That Would Make the CFPB More Accountable to Lobbyists

by Jeff Sovern

From The Hill. Excerpt:

A spending bill released Wednesday by the House Appropriations Committee includes major restraints for financial regulatory agencies. * * *

Including the provisions in the spending bill, which is must-pass legislation, increases the odds they could become law.

The measure places the Federal Deposit Insurance Corporation, Consumer Financial Protection Bureau (CFPB), National Credit Union Association, Federal Housing Finance Agency, the Office of the Comptroller of the Currency and regulatory functions of the Federal Reserve under the congressional appropriations process.

For more on why this measure would make the CFPB accountable to lobbyists, see here.

Politico: GOP Wants to Use Reconciliation to Bring CFPB's Funding Under Congressional Control

by Jeff Sovern

Here.  Using reconciliation would make the bill filibuster-proof, but would require the Republicans to lose no more than two of their number, assuming no Democrats voted in favor of the bill. 

LA City Attorney: Why we can’t lose the Consumer Financial Protection Bureau

by Jeff Sovern

Some congressional Republicans have said that the CFPB was asleep at the switch when it came to the Wells Fargo unauthorized account scandal, and that it just piggy-backed on the LA City Attorney, which was the first governmental office to bring a case against Wells for the accounts.  But now the LA City Attorney himself, Mike Feuer, says that it is "especially outrageous for Republicans to latch onto the Wells Fargo fake accounts scandal to back up their claim that the CFPB needs a drastic overhaul." In his op-ed, Feuer also says:

Nor should the CFPB be emasculated in the multiple ways the House bill threatens, from eliminating the bureau’s ability to target deceptive and abusive practices — predatory lenders, have at it! — to erasing its authority over payday lenders.

The Financial CHOICE Act would effectively prevent the CFPB from enforcing any consumer protections within another regulator’s jurisdiction. The legislation would rob the public of the chance to review consumer complaints lodged with the Bureau—data my office relied on in our investigation of Wells Fargo. The House bill would eliminate the CFPB’s authority with respect to those pernicious arbitration clauses that Wells Fargo and other corporations impose to block customers from airing grievances in court. Buried in the bill is a provision giving targets of CFPB investigations the ability to seek court orders setting aside demands for information about potential abuses.

Alan Kaplinsky Reports Rumor that CFPB to Issue Arbitration Rule By July 31 and Cordray to Step Down This Year

Here, in the Consumer Finance Monitor.  Alan also notes that the rule can be blocked by congressional invocation of the Congressional Review Act, litigation, or, if Cordray does indeed step down, by a new Trump-appointed director.

WSJ Editorial Hits CFPB Director Cordray Again

The headline reads Trump to Cordray: You’re Not Fired. It argues that the Treasury Report has made a strong case for firing the CFPB director.