State Legislature to Regulate California Payday Loan Alternative Apps

Inside Subprime: May 08, 2019

By Jessica Easto

Senator Ted Cruz (R-Texas), along with a handful of other Republicans, has reintroduced a bill that would eliminate the Consumer Financial Protection Bureau (CFPB).

Cruz has introduced and sponsored the bill, named the Repeal CFPB Act, at least twice in the past few years. In 2015, when the CFPB was four years old, Cruz introduced a bill to kill it, saying, “The only way to stop this runaway agency is by eliminating it altogether.” When that bill did not pass, Cruz tried again in 2017.

“Don’t let the name fool you, the Consumer Financial Protection Bureau does little to protect consumers,” Cruz said at the time. “During the Obama administration, the CFPB grew in power and magnitude without any accountability to Congress and the people, and I am encouraged by the actions President Trump has begun to take to roll back the harmful impacts of an out-of-control bureaucracy.”

The CFPB was created in 2010 as part of the Dodd–Frank Wall Street Reform and Consumer Protection Act, which was passed in response to the financial crisis of 2007–08 and the Great Recession. The CFPB is an independent unit, funded by the US Federal Reserve, that regulates and monitors bank and non-bank financial institutions, tracks consumer complaints, and monitors and reports on financial markets.

According to reports, as of 2017, the CFPB has offered $12 billion in monetary relief to some 29 million victims of predatory loans, credit card services, and other financial products, including a high-profile case that settled for $110 million. The CFPB has also attempted to create and enforce rules designed to protect consumers from predatory mortgages and payday loans, although legislators have been working hard to repeal them. Last year, the CFPB’s consumer complaint database received a record-breaking 257,000 complaints, 87 percent of which resulted in some form of consumer relief.

“There has never been a greater farce and waste of government resources than the Consumer Financial Protection Bureau, and now is the time to eliminate it,” Senator Cruz said in a recent press release. “Make no mistake, it does little to protect consumers and was created during the Obama administration to enforce burdensome regulations which have stunted economic growth and negatively impacted small businesses and consumers.”

This time, the bill has some support in the Senate, including Senator Mike Lee (R-Utah), Jim Inhofe (R-Oklahoma), Ben Sasse (R-Nebraska), Mike Rounds (R-South Dakota), Marsha Blackburn (R-Tennessee), and Rand Paul (R-Kentucky).

“I am proud to reintroduce this legislation alongside Senators Lee, Inhofe, Sasse, Rounds, and Blackburn, and urge our colleagues to take this up for a vote in the Senate as soon as possible,” said Cruz.

You can read the full bill here.

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