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Apr 7, 2017
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The Consumer Financial Protection Bureau is a recently created federal agency. But what does it do? Who is it supposed to help? Is it protecting or hurting consumers? Should we even keep it around? Learn more in this short video.

This video is part of a collaborative business and economics project with Job Creators Network and Information Station. To learn more, visit informationstation.org.

Like so many big government “solutions,” the creation of the Consumer Financial Protection Bureau has hurt millions—particularly the poor. 

  • The Consumer Financial Protection Bureau (CFPB) was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 with the mission of protecting consumers from fraudulent, deceptive, and discriminatory banking practices.View Source
  • Despite its stated goals, the CFPB has ended up harming millions of consumers by imposing thousands of regulations on banks which have limited market options and raised the cost of important goods, like certain kinds of mortgages for home buyers.View Source
  • The CFPB’s actions have particularly hurt the poor.View Source
  • Related reading: “Dodd-Frank Is Hurting Community Banks” – New York TimesView Source

The Dodd-Frank financial reform has particularly hurt small community banks, which millions of Americans and small businesses depend on. 

  • Between the passage of Dodd-Frank in 2010 and 2014, the number of small community banks nationwide shrank by 14%.View Source
  • Between the passage of Dodd-Frank in 2010 and 2015, only three new banks opened in the United States.View Source
  • Dodd-Frank has raised compliance costs for small banks, with the median number of additional staff required to meet the new compliance regulations doubling.View Source
  • Related reading: “Hurting the Poor Is No Way to Help Them” – National ReviewView Source

Legal scholars found the Consumer Financial Protection Bureau used faulty data in some of its key decisions impacting millions of Americans.

  • Review by legal scholars at the University of Virginia and George Mason University shows that the Consumer Financial Protection Bureau’s arbitration study ignored data on arbitration outcomes, instead focusing only on arbitration awards.View Source
  • The CFPB study relied on surprisingly high payout rates from class action settlements, which were heavily skewed by including a small handful of extremely large class action settlements that are not representative.View Source
  • The CFPB was created by the Dodd Frank Wall Street Reform and Consumer Protection Act of 2010.View Source
  • Related reading: “Dodd-Frank Is Hurting Community Banks” – New York TimesView Source
  • Related reading: “Hurting the Poor Is No Way to Help Them” – National ReviewView Source

The Consumer Financial Protection Bureau forces thousands of regulations on banks costing billions of dollars in compliance, hurting us all.

  • Though it was designed to protect consumers by exposing fraudulent, deceptive and discriminatory banking practices, the Consumer Financial Protection Bureau (CFPB) actually harms consumers by limiting market options and raising the cost of important goods, such as certain kinds of mortgages for home buyers.View Source
  • The CFPB has moved to restrict the practices of short-term loans.View Source
  • By restricting access to short-term loan options, the CFPB is unintentionally denying access to credit markets to millions of poor Americans, who will either face even higher prices because of restricted competition or will be forced to seek loans on the black market.View Source
  • The CFPB was created by the Dodd Frank Wall Street Reform and Consumer Protection Act of 2010.View Source
  • Related reading: “Dodd-Frank Is Hurting Community Banks” – New York TimesView Source

When you think about government agencies like the Environmental Protection Agency or the Food and Drug Administration, you probably think their activities are overseen by Congress—that is, we the voters elect members of Congress to monitor different departments of the federal government.

But there’s one federal agency that doesn’t operate like that. It’s called the Consumer Financial Protection Bureau, or CFPB.

Created by the Dodd-Frank financial law in 2010, the CFPB claims to hold banks and lenders accountable and protect Americans from predatory lending practices—keeping the borrowing process fair. It sounds reasonable, but the law gave them too much power.

Unlike most government entities, the agency receives its budget automatically every year and doesn’t have to answer to Congress. Its director is also a White House appointee and can only be fired by the president.

But how does this affect you?

Well the CFPB is one of the government’s most active rule-makers, churning out countless mandates to regulate the borrowing process. It targets numerous financial services—including mortgages, credit cards, car loans, and short-term loans.

The agency is especially focused on punishing American banks and piling on thousands of regulations that cost billions of dollars in compliance. And since the CFPB doesn’t have anyone to answer to, it can levy fines and penalties onto whomever they want.

This huge cost makes it harder for banks to lend money to individuals and small businesses in need, preventing them from surviving and thriving. If a small business can’t secure a loan, for example, it can’t expand and hire more employees—hurting people who need jobs.

Since the passage of the Dodd-Frank financial law, only three new community banks have opened a year, compared to a historical average of 100 per year. On top of that, over 1,200 U.S. banks have gone out of business since 2010. This leaves individuals and small businesses with fewer options.

Keep that in mind the next time you need a loan. It might be the CFPB holding you back.

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