September 19, 2018 | ° F

HINRICHS: Americans must oppose measures to diminish financial protections


Opinions Column: Unveiling the Truth


A man with a vision of unregulated growth and prosperity looked out at the self-proclaimed epoch of the business world to welcome a new era. His name was Don Regan, and he was the man who could openly tell a president that “You're gonna have to speed it up.” On March 28, 1985, Don Regan, former chairman of Merrill Lynch, stood at the bell in the New York Stock Exchange, while beside him, former President Ronald Reagan called “the bears back into hibernation” and “(turned) the bull loose.”

Don Regan was one of many presidential Geppettos to enter the White House and orchestrate the deregulation of the financial sector and the protection of the sector’s interests. 

The decades of unquestioned Goldman Sachs governments were decades of coordinated laissez-faire deregulation that not only let the bull loose but also placed the economy, lady liberty and the American public in the beast’s path dressed in red from head to toe.

Interest rate ceilings removed gradually from 1980-1984, separation of commercial and investment banking repealed in 1999, separation of banks and insurance companies repealed in 1999, diminished oversight of the SEC as complex derivative securities and irresponsible leveraging practices grew and the passing of the Depository Institutions Deregulation and Monetary Control Act of 1980, the Garn–St Germain Depository Institutions Act of 1982 and Financial Services Modernization Act of 1999 were all measures that provided the bull free reign and consequently aided in the preventable loss of $19.2 trillion in total household wealth and more than 12 million jobs.

After the Great Recession in 2008, a realization of how far deregulation had gone led to the passing of the Dodd—Frank Wall Street Reform and Consumer Protection Act in 2010. Among other provisions, the act established the Consumer Financial Protection Bureau (CFPB). 

In its short existence, the CFBP has already returned $12 billion to more than 29 million consumer victims of the loose bull.

Critics of the CFBP claim it is an affront to American individual liberties. But, the only affront to individual freedom is the CFBP’s curbing of the faux freedom of corporations to prey of the American public and profit off of our losses through illegal practices. 

The CFBP protects the American people. In September of 2014, the CFPB ordered JPMorgan Chase to refund $309 million to more than 2.1 million Americans for charging them for identity theft and fraud monitoring services, which the consumers had never agreed to.

The CFBP protects military personnel. In June of 2013, the CFPB ordered U.S. Bank and its nonbank partner Dealers’ Financial Services to refund $6.5 million to service members, and in November of 2013, the CFPB ordered the lender Cash America to pay up to $14 million for illegally overcharging members of the military.

The CFPB protects students. For many Rutgers students, the agency may have been hidden among the alphabet soup of government agencies, but in our age of student debt, the CFPB ought to be our best friend. From March 1, 2016 to Feb. 28, 2017, the Bureau dealt with approximately 7,500 private student-loan complaints, 2,200 debt-collection complaints relating to private and federal loans and 11,500 complaints regarding the managing and repaying of federal student loans. The CFPB has seen a 325 -percent increase in student-loan complaints and is an advocate for student-loan forgiveness.

After the former director of the CFBP, Richard Cordray, resigned, he promoted his Chief of Staff Leandra English to the position of deputy director on the condition that she will be in the position until the Senate confirms a replacement.

With the resignation of Corday, President Donald J. Trump's administration has chosen to continue its practice of appointing individuals whose ideologies, beliefs and actions run contrary to the objective of the agency. Mick Mulvaney, acting director of the CFBP and current director of the Office of Management and Budget, is an enemy of student loans, a believer that social security is a Ponzi scheme, a proposer of the abolishment of the EPA, a threat to first responders. And according to Trump, is fit to lead the CFBP, which he has venomously opposed and has called “a joke ... in a sick, saw way.”

One of Mulvaney’s first measures amid his gutting of the CFBP was to suspend a regulation on payday lenders that targets and victimizes low-income borrowers.

Trump has taken to Twitter to claim that the CFPB “has been a total disaster” and “Financial institutions have been devastated and unable to properly serve the public.”

Federally insured commercial banks and savings institutions reported 5.2-percent growth since the third quarter of 2016, and the proportion of unprofitable banks has actually fallen. 

Whether the CFBP remains the watchdog for the American public or becomes the lap dog for Wall Street need not be out of the hands of the people. The Consumer Financial Protection Bureau has tirelessly protected us. Now it is our time to protect it by opposing measures to diminish and erase it.

Luke Hinrichs is a School of Arts and Sciences first-year majoring in political science and economics. His column, “Unveiling the Truth,“ runs on alternate Wednesdays.

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Luke Hinrichs

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