American consumers losing their federal safety net

The description on the Consumer Financial Protection Bureau’s website hasn’t changed. It says, “The Consumer Financial Protection Bureau is a U.S. government agency that makes sure banks, lenders, and other financial companies treat you fairly.”

But the agency might as well remove the description. It’s simply not true anymore. The bureau was created in 2011 after the 2008 financial crisis to protect consumers from fraud, predatory lending practices and abuse. But piece by piece, the Trump administration is dismantling the agency.

For anyone who needs a mortgage or has student debt, for members of the military in need of extra cash, for consumers at the financial edge, the undoing of the Consumer Financial Protection Bureau is bad news. The weakening of protections to ensure fair treatment could be enough to send a consumer’s financial house of cards tumbling.

It’s not hard to remember a time when members of the military found themselves paying interest rates as high as 500 percent to payday lenders near military bases. Then came the Military Lending Act, a federal law passed in 2006 that caps the annual interest rate, including fees and other charges, at 36 percent for people in the armed forces. It’s a law enforced by the Consumer Financial Protection Bureau, but one the bureau now wants to ignore.

And what of the 44 million Americans who carry a total of more than $1.5 trillion in student debt? More than 10 percent are in default on those loans after just three years. Far more have trouble repaying them or end up in default years later. Those numbers are higher in the for-profit college world, where, by some analyses, nearly half of borrowers end up delinquent or in default. That’s an industry the Consumer Financial Protection Bureau has gone after for charging interest rates exceeding 16 percent, when some federal loans hover below 6 percent for undergraduates, and for deceptive acts that push students toward higher-cost products. Overall, the bureau returned $750 million to student loan borrowers harmed by practices like debt-relief scams, hostile debt collection, and “auto-defaults” when a co-signer died or declared bankruptcy.

Now all of that work, too, is threatened. The bureau’s student loan ombudsman, Seth Frotman, resigned this week, saying the agency “has abandoned the very consumers it is tasked by Congress with protecting.” He said the bureau’s career staff lacks oversight and enforcement power, and the support to do its job.

Making matters worse, President Donald Trump picked Kathy Kraninger, who lacks consumer finance experience and is known for helping to implement the administration’s immigration policy of separating children from families at the border, to head the bureau. Kraninger is expected to implement the policies of current head Mick Mulvaney, who called the agency “a joke,” and clearly treats it like one.

Millions of consumers have relied on the bureau’s protections, including voters who put President Donald Trump in office hoping that he would improve their economic standing. Now he’s putting their financial security at risk. And that’s no joke. — The editorial board