Tuesday, October 02, 2012

The CFPB Is Protecting Consumers From Financial Predators-- So The GOP Wants To Kill It


The campaign ad above is from Wayne Powell, the intrepid Democrat Steve Israel refuses to allow the DCCC to help take on Eric Cantor. Luckily we have men and women like Powell who are undaunted by corrupt Beltway Insiders-- like Cantor and Israel-- and work to  represent the interests of ordinary working families anyway. DCCC or not, Powell is hammering Cantor mercilessly. Cantor and his cronies, especially his cronies on the House Financial Services Committee, opposed the creation of the Consumer Financial Protection Board, opposed the appointment of, first Elizabeth Warren and then Rich Cordray to head it, and have worked hard to make sure it would be unfunded, unmanned and ineffective. But Cantor and his fellow bankster shills in Congress have failed.

Yesterday the Bureau announced that it had ordered American Express to refund $85 million it had bilked from consumers with illegal credit card practices. American Express has its own PAC and spends massive amounts of money bribing Members of Congress, mostly Republicans (59%) but corrupt conservatives on both sides of the aisle. So far this cycle they have given federal candidates $436,700 and they sure hone right in on the Members of Congress with the sleaziest sense of ethics. The largest reported bribes ($10,000 each) went to powerful members who always put the banksters first and the consumers last:

Spencer Bachus (R-AL), Chairman, Financial Services Committee 
John Boehner (R-OH), Speaker
Joe Crowley (New Dem chairman-NY), shadiest Democrat on the Ways & Means Committee
Ron Kind (New Dem vice-chair-WI), second shadiest Democrat on the Ways & Means Committee
Gregory Meeks (New Dem-NY), member of the Financial Services Committee; just named by CREW one of Congress' most corrupt members for 2011-12
Mel Watt (D-NC), member of the House Financial Services Committee

Other members known throughout Washington for being for sale who have received inordinately large sums of money from American Express include:

Dave Camp (R-MI)- $5,000
Eric Cantor (R-VA)- $6,000 (In 2010 Cantor got $10,000)
Scott Garrett (R-NJ)- $6,500
Jeb Hensarling (R-TX)- $7,500
Steny Hoyer (D-MS)- $5,000
Jim Matheson (Blue Dog-UT)- $8,000
Ed Royce (R-CA)- $7,000
 Aaron Schock (R-IL)- $5,000
Debbie Wasserman Schultz (New Dem-FL)- $7,500

Just in the past 4 years American Express has discovered Patrick McHenry, one of the sleaziest members of the House Financial Services Committee and known throughout Washington as a complete lackey for the banking industry. Since he does their bidding anyway, they just give him a thousand here and a thousand there. McHenry's in a tough reelection campaign this year, being challenged by a reform-oriented straight-shooter, Rep. Patsy Keever who told us that she was "not surprised to see that the American Express PAC contributed to Patrick McHenry during this election cycle. In fact, PACs have contributed more than $500,000 to his campaign so far.”

Right after the ruling former (and future) Congresswoman Carol Shea-Porter told us she was delighted: "I am thrilled to hear that the Consumer Financial Protection Bureau has once again done its job of protecting Americans from illegal financial practices. As a member of Congress, I was proud to vote for the CFPB's creation under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

My opponent voted to weaken the CFPB (H.R. 1315) and opposes Dodd-Frank. His new position on the Financial Services Committee means he has more power than ever to support Big Finance at the expense of his constituents. I look forward to his removal from this committee, and to protecting middle class families once again when I am elected to Congress this November."

Ed Royce takes far more than McHenry and Guinta do and his opponent, Jay Chen, has been focused like a laser on consumer protection.
"The Consumer Financial Protection Bureau has proven its importance by obtaining $85 million in refunds for mistreated consumers. Unfortunately, representatives like Ed Royce have opposed the Consumer Financial Protection Bureau from the very beginning, after taking millions in campaign contributions from the entities that the Bureau is supposed to monitor. We need leaders who will look out for consumers and the middle class, not just the financial institutions who are profiting off of them."
Hammer, meet nail; nail meet head. And basically that just what happened yesterday. The CFPB announced an enforcement action with orders requiring three American Express subsidiaries to refund an estimated $85 million to approximately 250,000 customers for illegal card practices. This action is the result of a multi-part federal investigation which found that at every stage of the consumer experience, from marketing, to enrollment, to payment, to debt collection, American Express violated consumer protection laws. That's why Republicans and conservative New Dems want to kill the bureau. It messes with their lucrative sources of bribery. The bill originally pass the House at the end of 2009 223-202, every single Republican voting NO, along with 27 Democrats, mostly corrupt Blue Dogs and New Dems, but a few progressives who felt the bill didn't go far enough to protect consumers. Among the Democrats who sold out to the banks (who are running for reelection in November) were Ben Chandler (Blue Dog-KY), Henry Cuellar (Blue Dog-TX), Ann Kirkpatrick (AZ), Mike McIntyre (Blue Dog/New Dem-NC), and Kurt Schrader (Blue Dog/New Dem-OR). Most of the Democrats who voted against the Consumer Protection Bureau were defeated in 2010 or are retiring, many to become lobbyists.

This is from a press statement by the CFPB: "Several American Express companies violated consumer protection laws and those laws were violated at all stages of the game-- from the moment a consumer shopped for a card to the moment the consumer got a phone call about long overdue debt," said CFPB Director Richard Cordray. “Today's orders require the American Express companies to fully refund about $85 million to consumers and it requires them to make specific changes in their business practices. The American Express companies will identify the harmed customers, notify them, and make sure they get back their money.” 
 •         Deceived consumers who signed up for the American Express “Blue Sky” credit card program: Consumers were sometimes led to believe they would receive $300 in addition to bonus points if they signed up for this American Express Centurion Bank program. But consumers who met the qualifications did not receive the $300. This violates federal laws prohibiting deceptive practices.

 •         Charged unlawful late fees: American Express Centurion Bank and American Express Bank, FSB billed late fees on certain cards based on a percentage of the debt in violation of the Credit CARD Act.

 •         Unlawfully discriminated against new account applicants on the basis of age:  American Express Centurion Bank used a credit scoring system that treated charge card applicants differently on the basis of age. For a period of time, the bank did not fully implement the system for applicants over the age of 35. This violated the Equal Credit Opportunity Act because it requires credit scoring systems that take age into account to be properly designed and implemented.

 •         Failed to report consumer disputes to consumer reporting agencies: American Express Centurion Bank and American Express Bank, FSB failed to report the existence of certain customer disputes to credit bureaus, which is a violation of the Fair Credit Reporting Act.

 •         Misled consumers about debt collection: All three of the American Express subsidiaries deceived consumers into believing there were certain benefits to paying off old debt. Consumers were wrongly told that if they paid off the old debt, the payment would be reported to credit bureaus and could improve their credit scores. In fact, American Express was not reporting the payments and the debts were so old that even if they had tried to report them, many of the payments would not have appeared on these consumers’ credit reports or affected their credit scores. American Express also told some consumers that a portion of their debt would be waived or forgiven if they accepted certain settlement offers.  But for customers who applied for a new American Express card, the company was not really forgiving or waiving the debt.
Aside from a $25.7 million fine, American Express has to pay restitution to consumers who were misled into paying old debt because they thought it would be reported to the credit bureaus. They'll reimbursed all the money American Express tricked out of them, plus interest. One of my favorite parts of the ruling is that consumers who were falsely promised their debt would be forgiven and who were denied new credit cards because the debt was not really forgiven, will receive $100 and a pre-approved offer for a new card with terms the CFPB and the FDIC find acceptable. If the consumer already paid the waived or forgiven amount in order to get a new card, they will be refunded that amount plus interest. Consumers who were tricked into paying illegal "late fees" are getting their money back as well (with interest) and American Express so-called Blue Sky customers who were promised $300 for signing up-- and then never got it-- will each now get the $300. 

Next time you ask yourself about how much of a difference there is between Democrats and Republicans, remember-- there are some really bad Democrats (and sleazy powermongers like Steve Israel, Debbie Wasserman Schultz and Joe Crowley are working overtime to recruit more) but legislation like this could only have been enacted by progressive Democrats. And only Democrats would have ever enforced it. Does that mean we should back Blue Dogs and New Dems? Of course not. They may not always be as bad as Republicans, but they are always bad. Whenever possible, they should be replaced with progressives. That's why Beto O'Rourke's win against Silvestre Reyes in TX-16 (El Paso) was one of the most significant events of this election cycle. It's important to support reformers like Patsy Keever, Carol Shea-Porter, Beto O'Rourke and Jay Chen.

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