Consumer Financial Protection Bureau Not Actually Protecting Consumers

In one of the first tests of its willingness to show its muscle, the new agency created to protect consumers declined on Thursday to put up a fight.

The agency, the Consumer Financial Protection Bureau, introduced a proposal that would make it easier for credit card issuers to charge fees before borrowers’ accounts were officially open.

This, from the Times this morning, makes me feel really sad, because I have always had very high expectations for the C.F.P.B. Whenever laws are passed to help protect consumers from predatory fees issued by credit card companies (or any other sort of lender for that matter), credit card companies regroup and figure out new ways to charge consumers and make their big piles of money. The issue here stems from the bit in the Credit Card Act that was passed in 2009 that said credit card issuers could not charge fees equal to more than 25 percent of the borrower’s credit limit in the first year after the account was opened. Credit card companies got around this by charging application and processing fees before accounts were open, so the Federal Reserve stepped in and said, “Hey, stop being jerks! We’re going to apply the law to these upfront fees too.” That’s when First Premier Bank of South Dakota jumped in with a lawsuit saying the law would cause them “irreparable harm” if it couldn’t collect these fees, and rather than sticking to their guns, the C.F.P.B. said, “Hmm, maybe we’ll eliminate the rule for these upfront fees then.” First Premier Banks provides credit cards to people with terrible credit histories, and if anyone needs protection, it’s those consumers.

You know who wouldn’t stand for any of this? Elizabeth Warren. Elizabeth Warren would have fought for the little guys.

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