The Consumer Financial Protections Bureau was created as part of the 2010 Dodd-Frank Act, which was passed as a stabilizer for the economy after the 2008-9 recession. This act was meant to regulate commercial financial institutions, in large part because of the role that the reckless behavior of banks played in creating the crisis.
The battle over regulation of financial institutions is long and complex, but at the heart of it it seems like we just have not learned from our mistakes. In Monetary and Fiscal Policy, we learned a lot about regulation and banking history, and it seems that regulation and de-regulation typically follow the patterns of a business cycle - at the end of a recession, we regulate the financial sector to make sure the recession doesn't happen again, and as the economy recovers, we de-regulate because financial institutions don't need guidelines again, which causes or contributes to another recession.
The CFPB plays a significant role in this regulation environment in making sure it stands for customer's best interests. Although this seems like petty political squabbling, I admire Leandra English for standing up for her predecessor's wishes and the way she believes the CFPB should be run.
https://www.politico.com/story/2017/11/27/consumer-financial-protection-bureau-fight-mulvaney-english-190862
Nice article Madeleine. I agree with you, English is doing the right thing for fighting for the CFPB. Being able to re-adjust to avoid another recession is vital (we do not want another great recession). Even though our economy is doing well right now, we need to be aware of possible economic indicators of another recession. De-regulating during certain points of our business cycle can be the difference between a good year and a bad year. Hopefully someone listens to Leandra!
ReplyDeleteI agree Madeleine, the Consumer Financial Protections Bureau is worth fighting for. New regulations always come from recessions, and eventually go away when the economy is stabilized. Once the regulations are removed, the economy is put at risk of failing again. It seems like English believes we should be proactive instead of reactive. I think it makes sense to be proactive, to ensure our economy stays on the right track.
ReplyDeleteThe CFPB came out of the global financial crisis--as a way to try to prevent another one. CFPB fights to protect consumers from fraudulent financial practices--like the kinds of misleading mortgage loans that helped get many poorer homeowners in heavy debt and helped cause the financial crisis. We all have to think about what would fill its role if it is weakened or shut down.
ReplyDeleteI would no doubt agree that there is more public pressure in bad times than in good times for the government to act and as such regulation is more likely to occur then. Ms. English may indeed be standing up for what she believes is right and attempting to continue Mr. Cordray's agenda but many legal authorities, including the CFPB's own legal counsel and a U.S. Distirct Court, have now stated that Mick Mulvaney is the rightful interim director of the CFPB.
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