Dodd-Frank Act Two Years Later

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July 21st marks the two-year anniversary of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) and one year since the Consumer Financial Protection Bureau (CFPB) opened its doors as an independent consumer agency.  Despite the GOP’s efforts in the U.S. House and Senate to defund and weaken the CFPB, the agency remains unscathed and on Wednesday took its first major enforcement action against a top lender.  According to the CFPB, Capital One will pay approximately $150 million to two million consumers as a result of the bank’s telemarketers “deceptively pushing such products as credit monitoring and payment protection.”

Consumers across the country support strong enforcement of Dodd-Frank by the CFPB.  In a poll released this week by AARP, the Center for Responsible Lending (CRL), Americans for Financial Reform (AFR) and the National Council of La Raza (NCLR), most Americans want stronger, not weaker, government oversight of financial companies. The poll also found that voters want clarity when dealing with financial companies: 92% favor a policy that requires banks, mortgage lenders, credit card companies, and student loan and auto lenders to provide clearer explanations of their rates, terms and fees.  Over the past thirteen months, the CFPB has developed a series of projects under the name Know Before You Owe: for mortgages, for student loans, and for credit cards that aims to help people understand the consequences of the debt they take on in order to make more informed financial decisions. In addition to simplifying mortgage disclosure, the CFPB is also proposing a rule to strengthen consumer protections on high-cost mortgage loans.

The CFPB now accepts consumer complaints through its website, by telephone, mail, e-mail and fax.  In the last 11 months, the agency has received more than 45,000 complaints, many about credit cards and mortgages. More than 37,000 complaints have been sent to companies for review and response. The consumer complaint database’s credit card data was recently made accessible to the public, which not only helps consumers make informed financial decisions, but also allows the CPFB to detect patterns of unfair or abusive business practices that harm consumers.

The CFPB is a model for how federal agencies should be in its transparency and responsiveness to the public. The agency has asked the public to comment and provide input on a number of issues from forced arbitration clauses to credit reporting agencies to prepaid cards.  The CFPB seems to be meetings its first year’s goals of laying the ground work to be a fierce federal protector of consumers.  However, there is much work to be done, particularly in addressing consumer protection priorities that are not specifically required under the Dodd-Frank Act, but are authorized and urgently needed such as establishing strong mortgage servicing standards that will provide affordable loan modifications to qualified homeowners; ending abusive forced arbitration clauses in consumer contracts; issuing rules to address unfair and discriminatory auto financing pratices like interest rate markups and buy-here pay-here abuses; and requiring mandatory certification of private student loans.

 Written by Ellen Taverna -National Association of Consumer Advocates, Legislative Associate