The conservative majority in the U.S. House of Representatives appears determined to rain on Elizabeth Warren and the Consumer Financial Protection Bureau, reports the Huffington Post. Dodd-Frank Act opponents Majority Whip Eric Cantor, Rep. Michele Bachmann and House Financial Services Chair Spencer Bachus have already voted to cut the Federal Reserve-funded budget of the CFPB from $143 million to $80 million. If the trend continues, the CFPB – which is scheduled to open on July 21, 2011 – will be the only federal bank regulator in the U.S. subject to political budget cuts.
The CFPB seeks to heal wounds of banking abuses
Harvard Law Prof. Elizabeth Warren, co-author of the book “Two-Income Trap,” has studied at great length how banking abuses have harmed U.S. families. The middle class sinks ever deeper into poverty, borrowing just to keep up with expanding bills and compensate for stagnant salaries. The Consumer Financial Protection Bureau’s goal is to unify the following seven federal agencies, per the Federal Register:
- Federal Reserve Board of Governors
- Federal Deposit Insurance Corporation
- Federal Trade Commissioned
- National Credit Union Administration
- Office of the Comptroller of the Currency
- Office of Thrift Supervision
- Department of Housing and Urban Development
Until now, none of these agencies had consumer protection as the primary agenda. Warren believes the middle class needs an advocate, and the Consumer Financial Protection Bureau will serve to help stem the tide of personal bankruptcies.
“The numbers are sobering,” Warren said at a Feb. 23 Chicago lecture. “Since the late 1970s, (personal) bankruptcy filings have doubled and doubled again. Women have been hit particularly hard. Over the course of 20 years, the number of women filing bankruptcy petitions increased by 662 percent. By the early 2000s, a woman was more likely to file for bankruptcy than to graduate from college.”
Support the Consumer Financial Protection Bureau
According to the Consumer Federation of America, the CFPB will play a major role in making sure that consumers are not abused by such things as subprime credit cards, which bear high rates and fees; bank overdraft loans, which have astronomical interest rates; military loan companies that attempt to operate outside the boundaries of federal regulation requiring a cap of 36 percent APR; and the most unscrupulous payday advance loan outlets, where fees can become excessive.
As John Wasik writes for Reuters’ Prism Money blog, consumers should be paying attention to what House Republicans are trying to do to the Consumer Financial Protection Bureau.
“I believe everyone with a credit card, bank loan or savings account needs to back Warren now,” writes Wasik. “Contact your senators and congressmen and urge them to leave the bureau’s funding alone, which is tied directly to the budget of the Federal Reserve.”