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431% Surge in PA Student Borrowers Who Have Depended on CFPB For Help With Their Lender, Just As Congress Tries to Eviscerate Agency
Washington, DC – This week, the US House Financial Services Committee will hold a Wednesday hearing on the so-called Financial CHOICE Act. The bill leaves Pennsylvania consumers and our economy even more vulnerable to Wall Street's recklessness than before the '08 crisis by taking aim at all of the 2010 Dodd-Frank Act’s protections caused by unfair bank practices abetted by regulatory failures.
In particular, the bill would eviscerate the Consumer Financial Protection Bureau, even as its latest report shows a critical need for the bureau to protect Pennsylvania students. Student loan complaints from Pennsylvania have surged 431 percent from last year at this time to this year, likely driven by publicity around its January enforcement action against servicing giant Navient. Pennsylvania’s spike in complaints ranks tenth highest in the nation, while the national total is 325 percent. Against a backdrop of more than $1 trillion in student loan debt in the country – where total national student loan debt has usurped credit card debt – the agency has prioritized enforcement action in student lending this year.
In fewer than six years since its creation, the CFPB is the only federal agency whose sole mission is to protect consumers, providing almost $12 billion in relief to 29 million Americans who have been wronged by financial bad actors. More than 26,000 Pennsylvania seniors, veterans, students, and others have depended on the CFPB for help in dealing with their bank or lender. Now, some members of Congress, including Congressman Keith Rothfus (PA-12), are working to eviscerate the agency, starting with tomorrow’s hearing in the House Financial Services Committee.
Michael Roles, Director of the Pennsylvania Public Interest Research Group (PennPIRG), said, "71% of Pennsylvania’s Class of 2015 is saddled with student loan debt, with $34,798 of debt on average, ranking second highest in the country per state. The CFPB continues to demonstrate to Pennsylvania borrowers that they’re standing in their corner. Unfortunately, some of our elected officials, like Congressman Rothfus, are attempting to deliver a low blow by weakening the bureau and undermining its ability to pursue its mission.”
“In just under 6 years, the nascent CFPB has restored order to financial markets torn asunder by a decade of weak regulation that emboldened corporate wrongdoers and led to the 2008 collapse,” said Ed Mierzwinski, Consumer Program Director at U.S. PIRG. “This reckless piece of legislation makes the wrong choice for consumers and the economy while Wall Street and predatory lenders cheer.”
The CHOICE Act, set for a hearing on Wednesday, eviscerates consumer protections by:
- Reversing 150 years of federal policy, the bill eliminates independent funding for the CFPB by placing it under the politicized Congressional appropriations process, giving powerful special interests massive influence over regulation of our financial system and economy;
- Neuters the director by allowing he or she to be fired at will and moving the agency fully under the executive branch;
- Terminating the CFPB’s UDAAP (Unfair, Deceptive, or Abusive Acts and Practices Authority) authority, limiting its ability to protect consumers and end dangerous practices;
- Eliminating the CFPB’s supervisory authority over all banks greater than $10 billion in assets and returning that authority to the bank regulators that infamously ignored warning signs of or even encouraged dangerous practices that led to the 2008 financial crisis;
- Eradicating the CFPB’s public consumer complaint database that forces wrongdoers to respond to consumer complaints;
- Making the CFPB’s key offices, of Older Americans, Financial Empowerment, Service Member Affairs and Students “optional,” so a future anti-consumer director could simply eliminate them. The Office of Students has led the bureau’s lawsuit against Navient, the massive student loan servicer, and has also protected student victims of numerous failed for-profit schools.
The CHOICE Act also eliminates numerous important safety-and-soundness and investor protections also enacted in the Dodd-Frank Act after the 2008 collapse. The committee is expected to vote on the bill as early as May 2nd and bring it to the floor in May as well, the group said.
“The CFPB is our consumer cop-on-the-beat, standing up for students, seniors, veterans, and indeed all consumers. It is shocking that our own elected officials are listening to special interests in Washington to tear it to ribbons just 9 years after the second-worst financial collapse in our nation’s history,” concluded Roles.
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