Why banks don’t want the agency to disappear | Global News Avenue

For years, U.S. financial companies have fought the Consumer Financial Protection Agency (the U.S. chief consumer financial regulator) in courts and media, portraying the agency as illegal and unfairly targeting industry players.

Now, CFPB opens Life support The Trump administration issued Stop working Ordered and closed its headquarters, the agency found itself an unlikely ally: the same bank reliably complained about rules and enforcement actions under its former director Rohit Chopra.

This is because if the Trump administration succeeds in reducing the CFPB to the shell of its former self, banks will find themselves competing directly with non-bank financial players, from large tech and fintech companies to mortgage, automobile and payday lenders, which are much less federal reviews compared to FDIC-backed institutions.

“The CFPB is the only federal agency that oversees non-execution agencies so that it can disappear,” said David Silberman, an experienced banking lawyer. “The payment app PayPalstripes, Cash Applicationthese things they will ride for free at the federal level. ”

This shift could bring the clock back to a pre-2008 environment, where it was left primarily to state officials to prevent consumers from being deprived of by non-bank providers. The CFPB was created in 2008 after the 2008 financial crisis caused by irresponsible loans.

But since then, digital players have been greatly infringed by providing banking services through mobile apps. Financial Technology led by Paypal and bell There are about a lot New Account Last year, as the sum of all large and regional banks, according to Cornerstone Advisors.

“If you’re a big bank, you certainly don’t want a world where non-banks have greater degrees of freedom and regulatory oversight,” Silberman said.

Acting director Russell Vought took over last month, and CFPB and its employees were in trouble, issuing a series of directives to the agency’s 1,700 employees at the time. With Elon Musk’s The efficiency ministry reportedly quickly fired about 200 workers to terminate the agency’s construction lease and canceled the contracts required to legally assume obligations.

In an internal email released Friday, CFPB chief operating officer Adam Martinez detailed the plans of about 800 supervisors and law enforcement officers.

Senior CFPB executives share more layoff plans that will enable the agency to Only five employeesCNBC reported. That would succumb to the agency’s ability to perform its supervisory and law enforcement duties.

This seems to be beyond Consumer Bankers Associationoften CFPB critics, would want. CBA representing the country’s largest retail bank, Prosecution CFPBs in the past year limit rules on overdrafts and credit cards Late payment fee. Recently, it pointed out the role of CFPB in maintaining a horizontal competitive environment among market participants.

“We believe that given the intersection of prudent regulatory inspections, new leaders can understand the need for large banks to continue to conduct inspections.” Lindsey JohnsonThe CBA president was in a statement provided to CNBC. “It is important that CFPB is the sole examiner of non-bank financial institutions.”

Vought’s obstacle plan is suspended by a federal judge who is now considering a merit litigation A preliminary injunction requested by the CFPB union.

Martinez is scheduled for a hearing for Martinez on Monday.

JPMorgan Chase CEO at the New York Bankers Conference in late October Jamie Dimon Encourage his peers”fight back“Oppose regulators. In the months leading up to this, the bank said Can sue CFPB investigates the peer-to-peer payment network Zelle.

“We are suing our regulators over and over again because things have become unfair and unjust, they are hurting companies, and many of these rules are hurting low-paying individuals,” Dimon said at the conference.

Now, more and more consensus, initial push”delete“CFPB is a mistake. Apart from the threat of increasing non-banks, the current rules of CFPB will still appear on books, but as the industry grows, no one will update nearby.

Industry advocates say small banks and credit unions will be more disadvantageous than their large peers if CFPB leaves, as they are never regulated by the agency and will face the same regulatory scrutiny as before.

“Traditional concepts are incorrect, banks only want CFPB leaveor that’s the bank wants a merger of regulators,” an executive at a major U.S. bank declined to confirm speaking about the Trump administration. “They want well-thought-out policies that support economic growth and stay safe and sound. ”

A senior CFPB lawyer who lost his position in recent weeks said the industry’s consistency with Republicans could backfire.

“They will live in a world where the world is not regulated every day, and the Fed, foreign FDIC and OCC are in charge,” the lawyer said. “It’s a world,” he said. applePayPal, Cash App and x Four years of crazy. Good luck. ”