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Thursday, February 21, 2019

Reprinted with permission from Creators.

A circle in hell has been set aside for financiers who fleece ordinary folks. This hot place has long rung with demands of death to the agency that protects working Americans from their pillage. President Trump is on the case as he tries to kill the Consumer Financial Protection Bureau by putting its enemies in charge.

Established in the rubble of the economic meltdown, the bureau’s job is to go after the financial rackets that target the working class — abusive mortgages, student loans created to fail, credit card trickery and payday loans charging 400 percent annual interest. It even gets money back for some people.

But milking the economically vulnerable has become a very big business for the highest names in American finance, as well as the lowest. The less sophisticated the borrowers the easier to trap them in a sea of small-print legalese, the outrageous terms carefully hidden.

The consumer-focused agency’s existence, of course, drives Wall Street nuts. “Wall Street hates it like the devil hates holy water,” Sen. Dick Durbin, D-Ill., said.

For much of the financial industry, the prized “customer” is a working stiff who has a job and a steady trickle of income to siphon off. Credit card companies, for example, love the borrower who racks up big balances and rolls them from month to month at interest rates often exceeding 20 percent. Some of the biggest names in U.S. finance — Bank of America, JPMorgan Chase, Citigroup and Wells Fargo — are making billions off unpaid credit balances.

Unfortunately, many financially strapped Americans are using plastic to pay for basics. And the numbers keep getting worse. Working-class Americans now spend a bigger chunk of their paychecks on servicing debt than they did three years ago, according to the Federal Reserve. Outstanding credit card debt broke a record this year, passing the $1 trillion mark.

Some are simply sucked in by promises of easy money. Scott Tucker, a payday lender in Kansas City, preyed on over 4.5 million people, charging as much as 700 percent. One of his outfits was named 500FastCash.

A payday loan is an advance of cash to be paid back when the borrower gets the next paycheck. This is a $40 billion-a-year business that makes $7 billion in fees alone, never mind the astronomical interest charges.

The first head of the Consumer Financial Protection Bureau, Richard Cordray, recently finalized some rules taming this industry. They included limiting the number of repeat loans and requiring lenders to verify that borrowers have a prayer of paying them back.

So Cordray had to go. Trump announced last week that he would replace him, putting Mick Mulvaney temporarily in charge. The White House budget director, Mulvaney has called the bureau a “sick, sad joke.”

Not so fast. Cordray resigned first, which he and others say automatically makes his deputy the new acting director. The lawyers are battling it out.

Why are we having this fight? Because the bureau was purposely designed to have more independence from politicians than other agencies regulating finance. Truck drivers and floor sweepers generally can’t afford teams of lawyers and lobbyists to change laws in their favor. Wall Street can.

Trump paired his decision to defang the bureau with one of his habitually batty claims, that “financial institutions have been devastated.” In the fact-based world, bank profits and stocks are soaring. (Financial companies are now four of the top 10 stocks held by hedge funds, according to WalletHub.)

You’d think that with the economy transferring hand-over-fist wealth to Wall Street, most politicians would at least tolerate a defender of the little guys. Sadly, the country is being run from hell.

Follow Froma Harrop on Twitter @FromaHarrop. She can be reached at fharrop@gmail.com.To find out more about Froma Harrop and read features by other Creators writers and cartoonists, visit the Creators webpage at www.creators.com.

 

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6 responses to “Fleecing Financial Consumers, Enabled By Trump”

  1. FireBaron says:

    As long as Teflon Donnie lives in his own alternate reality, he can talk about all the failing businesses, which are actually succeeding. He can ask Japanese car makers to open factories in America, when they actually building more cars here than US Automakers are. He can talk about Federal Agencies being useless, when they are actually helping people. What he cannot stand is when the law was written that can exclude him from appointing someone to take over an agency without going for a full Senate Confirmation hearing, which would require him to leave one office before he could take over the other.
    Is he finally realizing he is NOT the Chairman of the Board of Directors of the US, and cannot move his corporate officers around the way he wants to? That he just cannot “hire” someone to fill a job without someone else’ approval?
    Actually I doubt that last part, as he continues to believe he has total control and cannot understand why people disagree with him.

    • dpaano says:

      He realizes it, I’m sure, but he’s not afraid because most of the judges he’s nominated will, of course, side with him in any case brought before them….even the Supreme Court (Gorsuch)!! It’s the ONE chance for the Repubicans to take over our democracy and crush it!

  2. Richard Prescott says:

    Given Trump essentially admitted to fraud when he “settled” the infamous Trump University fraud case by paying $25 million it was no wonder that he did what he did with appointing former Goldman Sachs people to the financial parts of his administration.
    The current bullish!t fight in the CFPB over who is the acting chief is typical of someone who wants to control and eliminate any consumer protections.
    If the GOP allows this, then they will show just how complicit (the Webster’s “word of the year” for 2017!!) they are with wanting to ruin America.

    • dpaano says:

      But, Richard, we can see from all of Trump’s nominees to the various committees and offices that his main goal is to totally disrupt and do away with any sense of Democracy that we have in this country. All of his choices have one goal….to totally overturn everything that has been done in the past many years to ensure our democracy and protect the average citizen! So far, it’s working, especially in this case. But, unfortunately, the judge that has to make the decision is also one of Trump’s nominees….so, we can only guess at the final decision.

  3. Friends, do we not see how endemic and pervasive is the motivation to be greedy and partisan, affecting every aspect of American society?
    This isn’t some recent phenomenon—just an intensification of what started out as a desire for political and religious freedom from autocracy and religious bigotry as it existed by the 15th Century in Europe, motivating many to immigrate to America.

    Unfortunately, during that time the false perception that humans should be stratified in terms of monetary metrics, social status, and skin color was already gathering steam.
    Out of these hierarchies have evolved value systems based according to “limited unities”, i.e., every action and policy is fashioned with protecting one’s favored group.

    Out of this matrix has appeared a host of Trump’s, Bannon’s, Mitch McConnell’s, Koch’s and other sordid and greed-motivated individuals.

    I find it troubling and intriguing to see how much of a negative impact the severance from the ideals of Religion have impacted in a unique manner American society. A uniqueness resulting from what were the primary factors driving the creation of America.

    Trump, the GOP, and others, are simply doing what they’ve been conditioned to do—to look out for the vested interests of those in the restricted sphere defined by their own “limited unities”. In this sort of environment, with each group vying against the others for control and dominance, there can be no sense of reciprocity, no build-up of altruistic sentiments, and therefore no solution to what ails America by the corrosive forces of dominance and greed.

    Christianity as an Institution no longer can address this disease any more so than a Institution like Islam can adequately address in a united way the eradication of the disease of religious fanaticism. Since Religion is progressive—or this is the intent—the failure to address the ills today result from using the laws principles articulated and intended for a previous era. What is needed is a re-evaluation of the premise for why each era has had its own Messenger appear from the same Source, and seek the appropriate remedy for a patient[world society] which is in a different stage of the disease’s evolution.

    If we look at the plight of the Rohingya in Myanmar as they are being ethnically cleansed by the dominant Buddhist element, we see that the institution of the Message brought by the Buddha has also lost its ability to edify the hearts of the Buddhist majority. This breakdown of Religion is the root cause of these conflicts, and there is no reason for any rational and insightful person to think that the solution will come from the minds of humans alone in the form of a political solution.

    Therefore, we need to look elsewhere—> “www.bahai.org”. Per chance we will see a beacon of hope and a means of a systematic healing which will apply planet-wise.

  4. dbtheonly says:

    I submit that payday lenders have a role to play at the bottom of the economy. They provide a service that other financial institutions won’t. i.e. providing services to the weakest earners. Banks won’t touch these people. By their “Maintenance Fees” , Banks charge you for holding your money. “Checking Fees” charge you for writing checks. “Transaction Fees”.

    I also really need to take umbrage at the constant repetition of the “high interest rates” charged by payday lenders. The trick is that the interest rates charged are listed at an annual rate. The loans are due to lase a week or two. As an example, if Aaron lends me $50 and charges me $1 to pay him back in one week, the annual interest rate is about 104%.

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