Scimeca Urges CFPB to Take Action Beyond Looking Good

OPINION

The Time for the CFPB to Stop Merely Keeping Up Appearances Is Long Overdue

The cost-of-living continues to increase.

After years of inflation, consumers are bearing the brunt of economic burdens in a way that has not been seen for decades.

With prices rising almost as much as in the 10 years before the coronavirus pandemic, millions of Americans are now turning to credit to cover their daily expenses.

Meanwhile, the Consumer Financial Protection Bureau (CFPB), considered the top government consumer agency, continues to hinder consumers.

The average cost of goods and services has increased by over 17% since January 2021, impacting every U.S. consumer financially.

A recent Federal Reserve Survey of Consumer Expectations revealed that the ability of the average household to come up with $2,000 for an unexpected expense has reached a 10-year low.

Moreover, a majority of American workers stated that they could not afford an emergency expense of $500 or more.

At the same time, U.S. consumers are becoming increasingly pessimistic about their ability to access various forms of credit.

A recent survey by the American Financial Services Association (AFSA) indicated that consumer credit conditions have worsened in the first quarter of 2024.

All of this raises concerns about what the CFPB is doing to alleviate consumers’ struggles.

Unfortunately, they seem to be exacerbating the situation.

Consumers rely on credit for various purposes, from financing a car to covering unexpected expenses and emergencies.

For many families, borrowing is sometimes necessary to avoid missed payments and late fees.

Almost half of Americans rely on credit cards to meet essential living expenses. It is essential for all individuals, including the unbanked and underbanked households, to have access to credit.

Credit has always been a vital financial tool for the economy as a whole.

Sadly, the CFPB’s inconsistent regulatory processes surrounding credit access are often communicated through blog posts or random press releases, leading to confusion for both lenders and consumers and hindering lenders’ ability to provide credit to those in need.

It is time for the CFPB to streamline these processes and enable consumers to access the credit they require.

The CFPB can begin by establishing lending rules through formal rulemaking procedures.

This approach involves public notice, feedback, data review, consistency assessment with other laws, and evaluation of potential impacts on consumers and businesses.

Creating clear lending rules through this process will benefit consumer finance companies and their customers, ensuring continued credit access for individuals across income levels.

Additionally, the CFPB’s insistence on financial services companies collecting irrelevant and sensitive personal information, such as sexual orientation, raises privacy concerns.

Senator John Kennedy, R-La., expressed during a congressional hearing, “The customer, especially in a small town, will question why their sexual preference matters in a loan application.”

This data collection, aimed at an ideological agenda that does not benefit anyone, showcases the CFPB’s detachment from consumer interests.

Consumers require credit access now more than ever. The Consumer Financial Protection Bureau must shift its focus toward facilitating consumer lending or, at the very least, refrain from obstructing consumers and lenders.

Gerard Scimeca is an attorney and chairman of CASE, Consumer Action for a Strong Economy, a free-market oriented consumer organization which he co-founded.