Earlier this year, a mild controversy surfaced a specific area of the 2009 CARD Act. Womens’ groups and stay at home parents were the first to get fired up and before long, the minor problem enveloped into a quite a headache for the new Consumer Financial Protection Bureau. The law essentially made it impossible for state at home parents and others with no obvious ability to repay the money from securing a credit card in their name. This presented a host of problems and scenarios the authors of the bill had underestimated. With the consumer concerns, no time was wasted on the efforts by CFPB to right the wrongs in the law.
Loss of Resources
First, the concerns were for battered spouses who might have wished to take out a credit card without letting their abusers know. If they didn’t work – as many abuse victims don’t – this equated to an instant loss of resources. Many abused spouses are afraid to do anything to break free unless they’re able to do it in secrecy with no fear of repercussions. Many are often isolated and ashamed, as well. Access to the financial means for an escape can literally mean the difference in life and death.
The second concern revolved around moms and dads who stayed home with the little ones and also did not have any definitive means to make the payments. In both instances, those consumers wishing to secure a credit card were forced to bring their spouses into the mix to essentially serve as a co signer. Now, this unintentional aspect of the law is being eliminated, according to the consumer group.
Richard Cordray, who is the director of the Consumer Financial Protection Bureau, said a draft proposal is being worked on now that takes that rule out of the mix in in its entirety. Another part of the problem had to do with what could have been confusing verbiage. For instance, the Federal Reserve, which implemented the law, took it to mean companies could not consider total household income. They would then be forced to deny credit card applications to those with no verifiable income. Now that all are in agreement, don’t expect it to be a breeze from this point forward. Congress is a mess these days and unfortunately, it must go through those channels: slowly, with many potholes along the path and no shortage of mud, either.
Analyze and Implement
Cordray said his agency embraces the importance of getting this pushed through and reiterates his focus is on analyzing the data that’s been collected and then make the proposed changes formal. It’s during that last transition many are concerned the government may hinder the progress. Unfortunately, because of the structure of the agency, there is no other way to move these changes forward.
Let’s face it – there’s just nothing these adult elected leaders (and we know some of you will challenge the “adult” aspect of things) have been able to agree on in years. It’s only gotten worse with time and then, when you toss into the mix an election year, it’s silly to expect anything less than maddening chaos. Still, Cordray is hopeful and told the House of Representatives last week during a hearing that it was an “unintended consequence” of the law.
New Concerns
As if there’s not enough controversy, new reports are beginning to surface that Republicans as a whole want to overturn Dodd-Frank in its entirety; after all, it sure complicates matters for big banks, whose CEOs have historically have leaned right from a political stance. As a result, Cordray was put to the test with a series of irrelevant questions – including overseas money transfers and mortgages during the testimony. The goal, of course, was to push through the changes for that one very specific and very limited area. That did not happen, even as Representative Carolyn Maloney, who sponsored the law, said,
We feel that we created the CFPB to handle these types of problems, we’ve made it a top priority of the subcommittee and the committee, and it’s a priority on both sides of the aisle.
Despite the sidetracked nature of the meeting, Cordray insists he will be releasing these proposed rules in the near future.
There’s no denying the many substantial benefits CFPB has brought to the table for consumers around the country. In fact, its willingness to move forward with various promised changes has led it to being labeled one of the best government agencies ever founded. Still, the agency is quite limited when it has no choice but to await approvals from various legislative areas.
Have you participated in any of the various calls for action from CFPB? Participated in any of its polls? Submitted complaints or problems regarding credit card laws, mortgage regulations or student loan concerns? If so, what kind of response did you get?
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