The CFPB has been “heck bent” on the “P” part of their acronym. They have been handing out fines, and crafting one-sided rules for a while now. However, there has been a break in the ice. At the ABA’s annual convention on October 21st, Director Cordray made the following statement:
“At the same time, we recognize that consumers bear their own share of responsibility for how they participate in the financial marketplace.” For the full remarks, please visit: http://www.consumerfinance.gov/newsroom/director-cordray-remarks-at-the-american-bankers-association-conference/
All I can say is hallelujah! Each and every note or speech up to this point has been very one-sided in favor of the consumer. So much so, some credit unions have and are considering leaving markets they have participated in for many years. Markets that serve their members – without causing them harm! This one-sidedness has got to stop! The CFPB has become a runaway train, looking for an accident.
It’s all about balance. The American consumer needs to know there are consequences to their actions. The government cannot, should not, and will not bail them out from their willful and rash destructive behaviors. When they are misled however, they should expect someone bigger than the financial institution to come to their rescue.
I believe that if consumers know the line between their responsibility and the protections offered, then education will be much more meaningful and productive. Unfortunately, as it stands now, we bounce from one crisis to another, with no direction or plan. We just wait until the situation is critical and then the bail-outs begin. The current mode of operation encourages irresponsible actions by consumers. This isn’t the self-sufficiency America was built on.
It’s time to bring balance to the CFPB. Now, before it’s too late. How do we do that? Well, a good place to start would be in the name. Consider the resource reallocation and impact that would result from a name change to:
Consumer Financial Responsibility and Protection Bureau
With clearly defined lines of responsibility and protection, consumers would be encouraged to act responsibly with their finances (See the book “Nudge” to learn about this technique) and know when to look for outside help. No longer would “speck”, or “flipping” be seen as a riskless endeavor. There wouldn’t be an expectation of a government bail-out when wild speculation does not bear fruit. Consumers need to know that reckless behavior has consequences. With the downside clearly in play, consumers would be more willing and open to the educational part of the equation. People need to know how to avoid disasters before they happen and that if warnings are not headed, the disaster will not be shoved off on someone else.
For far too long, we have seen our government support bad behavior with bail-outs and most folks I know are pretty sick of the debt the taxpayers are taking on as a result.
Call to action: If this resonates with you, please contact your League, NAFCU, CUNA, and or the CFPB. A small change in the name could result in this runaway train slowing down to a reasonable and productive speed. And the good news is, Director Cordray already agrees with you! The consumer bears responsibility. Let’s bring that part in play. You’ve seen the outcome of the current one-sided focus so far.