The federal government launched the Consumer Financial Protection Bureau (CFPB) website this week in an effort to help protect consumers against the abuse of credit card companies, banks and other lenders. Consumers who have complaints about a bank, lender or creditor can visit the website and fill out a form to create a record of their complaint and launch a government-sponsored investigation against the party. This is good news for the millions of Americans who carry credit card debt.
Prior to the creation of the CFPB, banks and credit card companies were regulated by the Federal Reserve, the Federal Deposit Insurance Deposit Insurance Corp. (FDIC) and several other government agencies. These agencies were primarily responsible for ensuring that banks were operating soundly and complying with banking regulations. Consumer protection, while important, was often overlooked in favor of more pressing matters.
The launch of the CFPB shifts the regulatory landscape by providing an agency that is dedicated solely to consumer protection, tracking credit card terms and disclosures and issuing reports on industry practices. The new agency also appears to have a more collaborative element with the public than the existing regulatory agencies. Under the new system, consumers won’t be required to communicate with numerous agencies to file a complaint or settle a dispute. They may simply visit the agency’s website or call the CFPB by telephone.
The agency still has a few kinks that need to be worked out. The biggest issue facing the CFPB is that it doesn’t currently have a director or an advisory panel. Republicans and democrats in Congress are fighting over just how much oversight power the agency will have. Republican lawmakers have drafted legislation that would require the agency to be run by a five-member panel as opposed to a single director. It was reported that President Obama is in favor of a single director for the agency and would veto the Republican bill if it passed in the Senate.
This recession has been the result of various structural problems in the financial industries of our country. Many consumers today are tired of being misled by supposed professionals, by those who are supposedly there to help them. Hopefully, this new “watchdog” agency will foster confidence within consumers regarding the industry and more responsibility within the lending industry as a whole.
Fox Business: “New Financial Watchdog Accepts Credit Card Complaints,” Connie Prater, Jul. 22, 2011