The Consumer Financial Protection Bureau (CFPB), the watchdog agency conceived of and established by Sen. Elizabeth Warren (D-Mass.) in the wake of the financial crisis, had a hard time getting on its feet. The GOP tried everythingit could to hobble the bureau, but to no avail. Over the past couple of years, the CFPB has issued dozens of protections shielding consumers from shady practices by mortgage lenders, student loan servicers, and credit card companies. Here are ten things the CFPB, which was created in 2011, has done to protect the little guy:
1. Mortgage lenders can no longer push you into a high-priced loan: Until recently, lenders were allowed to direct borrowers toward high-interest loans, which are more profitable for lenders, even if they qualified for a lower-cost mortgage—a practice that helped lead to the financial crisis. In early 2013, the CFPB issued a rule that effectively ends this conflict of interest.
2. New homeowners are less likely to be hit by foreclosure: In the lead-up to the financial crisis, lenders also sold Americans "no doc" mortgages that didn't require borrowers to provide proof of income, assets, or employment. Last May, the bureau clamped down on this type of irresponsible lending, forcing mortgage lenders to verify borrowers' ability to repay.
3. If you are are delinquent on your mortgage payments, loan servicers have to try harder to help you avoid foreclosure: During the housing crisis, loan servicers—companies that collect payments from borrowers—were permitted to simultaneously offer a delinquent borrower options to avoid foreclosure while moving to complete that foreclosure. New CFPB rules force servicers to make a good faith effort to keep you out of foreclosure. That's not all: Loan servicers will now face civil penalties if they don't provide live customer service, maintain accurate mortgage records, and promptly inform borrowers whose loan modification applications are incomplete.
5. Borrowers with high-cost mortgages get an outside eye: Lenders who sell mortgages with high interest rates are now required to have an outside appraiser determine the worth of the house for the borrower. If a borrower is going to be paying sky-high prices for a fixer-upper, at least she'll know it beforehand.
6. Fly-by-night financial players will be held accountable: Part of the CFPB's mandate is to oversee debt collectors, payday lenders, and other under-regulated financial institutions that profit off low-income Americans. The bureau is preparing new restrictions on debt collectors, and considering new regs on payday loan industry. In the meantime, the bureau is cracking down on bad actors individually.
7. Folks scammed by credit card companies get refunds: In October 2012, the CFPB ordered three American Express subsidiaries to pay 250,000 customers $85 million for illegal practices including misleading credit card offerings, age discrimination, and excessive late fees. This past September, the CFPB ordered JPMorgan Chase to refund $309 million to more than 2.1 million Americans for charging them for identity theft and fraud monitoring services they didn't ask for.
8. Student lenders face scrutiny: The CFPB oversees private student loan servicing at big banks to ensure compliance with fair lending laws. In December, the agency announced that it will also start supervising non-bank student loan servicers, which are companies that manage borrowers' accounts. Many of these servicers have been accused of levying unfair penalty fees and making it hard for borrowers to negotiate an affordable repayment plan.
9. Service members get extra protection: In June, the CFPB ordered US Bank and its non-bank partner Dealers' Financial Services to refund $6.5 million to service members for failing to disclose fees associated with a military auto loan program. In November, the CFPB ordered the payday lender Cash America to pay up to $14 million for illegally overcharging members of the military.
10. Consumers get a help center: If your bank or lender does anything you think is unfair, the bureau has a division dedicated to fielding consumer complaints. The agency promises to work with companies to try to fix consumers' problems.
Federal Reserve chair Janet Yellen at a House hearing in February.
Between 2007 and 2009, the Federal Reserve—the US central bank tasked with regulating unemployment and inflation—handed out an unprecedented $20 trillion in super-low interest loans to failing Wall Street banks. The 2010 Dodd-Frank financial reform law required the Fed to restrict its emergency lending powers so that too-big-to-fail banks don't expect the central bank to dole out easy money again in the event of another financial crisis. The Fed waited overthree years to craft regulations to comply with the Dodd-Frank provision, and now it has finally drafted rules to limit its bailout powers, financial reform advocates say the restrictions are far too weak.
"The rule mostly reiterates the language of [Dodd-Frank]," Stanley says. "And the drafters take advantage of every opportunity to interpret the statute in ways that minimize limits on emergency lending authority."
Instead of limiting the Fed's emergency lending powers to temporary cash assistance as it is supposed to, the draft rule imposes no clear time limit on how long a big bank may remain dependent on Fed largesse. And the draft regulation defines "solvency" with far too broad a brush, according to AFR. The proposed rule does not require the Fed to assess if a potential borrower's liabilities exceed the value of its assets.
While the emergency lending rule would ban loans to a single institution, it would still allow the creation of loan programs that lend to, say, three or four of the largest banks, while allowing smaller banks to flounder.
The Fed's draft emergency lending rule does not even set an interest rate at which loans will be extended, a provision that would help to limit the "moral hazard" of easy money, AFR notes. And the rule is unclear as to how it would value borrowers' collateral.
The Fed declined to comment. But last year, former Fed chairman Ben Bernanke dismissed concerns that the central bank had not yet drafted a rule limiting its emergency lending powers, insisting that the language in the Dodd-Frank law was sufficient. "I think that [Dodd-Frank] is very clear about what we can and cannot do. And I don't think that the absence of a formal rule would allow us to do something which the law prohibits," including bailing out an individual firm, or lending to an insolvent bank, he said at a House hearing in July.
The Fed is currently accepting public comment on its emergency lending rule, so it is possible that reformers may win some victories before a final rule is put in place. Though the lobbying clout of the financial industry vastly outweighs that of pro-reform groups.
Before the Fed finally drafted its emergency lending rules, financial reformers said the central bank was likely dragging its feet because it didn't want to cede some of its authority over the financial world. This latest lukewarm effort to rein in its bailout abilities makes it seem like that may be the case.
"There are two ways to keep the economy on an even keel," AFR's Stanley told me last July. "Through clear, transparent rules that treat everyone the same—which is pretty challenging, and involves taking on a lot of interests." Or, he says, "you get to create a whole bunch of money out of nothing and you can hand it out wherever the problem is… It's easier to have this magic power."
Anti-gay graffiti on a home in the Gishiri neighborhood of Abuja. "Park and live" is intended to mean "pack and leave."
Around midnight on February 13, a young Nigerian man named Femi* was jolted out of his evening prayer by shouting outside his window. A crowd of some 40 people had gathered around his house. "No more homosexuals in Gishiri!" they yelled, referring to Femi's neighborhood within Nigeria's capital city, Abuja. The mob broke down his door and dragged him outside in his boxers. They beat him and about 13 other gay men that night with broken furniture, machete handles, sticks, and a garden rake, vowing to kill them if they didn't clear out of the neighborhood.
The attack, and other actsof vigilante violence targeting gays and lesbians around the country, was motivated by a new anti-gay law that Nigeria's president signed January 7. The measure, modeled off the one that Uganda enacted in late February, levies harsh prison sentences on anyone who makes a "public show" of a "direct" or "indirect" same-sex relationship or supports an LGBT organization (10 years), and anyone who attempts to enter into a same-sex marriage (14 years), even though this would be virtually impossible in Nigeria. The anti-gay backlash the law has provoked in Nigeria has led not just to violence, but to homelessness, unemployment, harassment, and a steep drop-off in HIV/AIDS treatment.
John Adeniyi narrowly escaped the attack in Gishiri and has been recording accounts of the violence that night. He's a human rights program officer at the International Center for Advocacy on Rights to Health (ICARH), an HIV intervention organization based in Abuja. To find out what life is like for Nigeria's gay community under the country's new law—and what gay Ugandans are starting to face—I visited with Adeniyi during a recent trip to Nigeria.
On Wednesday, Sen. Elizabeth Warren (D-Mass.) called on her colleagues in the Senate to reduce interest rates for Americans crushed by student loan debt, and pay for it by closing tax loopholes for the rich.
Last summer, after a rancorous debate, Congress passed a law setting interest rates for new student loans for undergrads at 3.86 percent for the coming year. (Rates were set to double to 6.8 percent.) However, the legislation did not cut interest rates for those who took out the same type of loan before July 1 of last year. Americans who financed their education earlier than that are paying off debt with interest rates of 7, 8, or 9 percent. On Wednesday, Warren joined Sens. Dick Durbin (D-Ill.), Jack Reed (D-R.I.), and Kirsten Gillibrand (D-N.Y.) in a speech on the Senate floor to highlight her plan to introduce legislation that would allow Americans with high-interest student loan debt to refinance their loans at the new rates being offered to first-time borrowers this year.
"Refinancing those old loans would lower interest rates to 3.86 percent for undergraduate loans," Warren said. "This is real money back in the pockets of people who invested in their education. Real money that will help young people find a little more financial stability as they work hard to build their futures. Real money that says that America invests in those who work to get an education."
Warren proposed that the rate cut be paid for by closing tax loopholes for the rich. "Right now, this country essentially taxes students—by charging high interest rates that bring money into the government—while at the same time we give away far more money through a tax code riddled with loopholes and let the wealthiest individuals and corporations avoid paying a fair share," Senator Warren said. "We can close those loopholes and put the money directly into refinancing student loans."
Last year, during the debate over what to do with skyrocketing student loan rates, Warren introduced her own bill that would have cut need-based undergrad loan interest rates to the same low 0.75 percent interest rate that banks pay to the Federal Reserve for short-term loans. The bill was never brought up for a vote. Warren voted against the compromise plan that Obama signed into law in August, which allows interest rates on undergrad loans to fluctuate all the way up to 8.25 percent.
More Americans enrolled in Obamacare plans in January than expected, according to data released Wednesday by the Obama administration. The Department of Health and Human Services (HHS) had expected to sign up 1,059,900 people last month. Instead, about 1.14 million people purchased health plans through the federal and state health insurance exchanges.
This is the first time since the uninsured started buying insurance on the exchanges in October that the administration has beaten a monthly enrollment goal. Here's what that looks like, via Sarah Kliff at the Washington Post:
The January sign-up number is down from the 1.8 million people who enrolled in December, but that was expected, because many Americans wanted to sign up before the start of the new year. Since enrollment began, a total of 3.3 million Americans have signed up for health insurance through the exchanges.
There was also a slight uptick in the number of young adults signing up for coverage in January. A quarter of the Americans who have enrolled so far are young people, who tend to be healthier, and who the Obama administration needs to hold down insurance costs. That's below the 40 percent target, but the trend is moving in the right direction.
The percentage of Americans who are uninsured hit a five-year low this month, according to a Gallup poll released Wednesday. Sixteen percent of adults do not have health insurance, the lowest uninsured rate since 2009.