President Trump won the election by appealing to blue collar, working-class voters desperate for a change from the norms of Washington. “I'm not going to let Wall Street get away with murder,” he said in January 2016. “Wall Street has caused tremendous problems for us.”
Wall Street and predatory lenders are assuming that rhetoric was all for show, and they were no doubt heartened by Trump’s steps last week to loosen rules and regulations intended to prevent another financial collapse. But Trump can prove them wrong and stand with ordinary Americans — including U.S. troops and veterans — by resisting calls from Wall Street and its supporters to fire Richard Cordray, director of the Consumer Financial Protection Bureau.
Since its founding in 2011, the CFPB has been a powerful ally of the little guy. It has delivered nearly $12 billion in relief to more than 29 million consumers harmed by illegal practices by predatory lenders, big banks, abusive debt collectors and outright scammers.
Our nation’s military families have been major beneficiaries of the agency’s focus on consumer financial protection and its aggressive scrutiny of the financial industry. The CFPB’s Office of Servicemember Affairs (OSA) was led for several years by the recently retired Holly Petraeus, a longtime advocate of financial education for military personnel and the wife of retired general David Petraeus. OSA’s new leader is Paul Kantwill, a former Pentagon official and retired colonel who had a 25-year career in the Army, including service in Afghanistan and Iraq. Through OSA and throughout the agency, the CFPB has made protecting our troops a priority.
Young servicemembers are often easy targets for financial firms marketing loans with ultra-high interest rates. Tens of thousands of servicemembers have benefited from the CFPB’s actions. The agency worked with state attorneys general to secure debt relief for 17,000 servicemembers tricked into taking out high-cost loans for computers, video games and electronics purchased near military bases. It sanctioned U.S. Bank and a partner company, ordering the return of $6.5 million in hidden fees to military borrowers. It ordered Navy Federal Credit Union to pay $28.5 million in penalties and refunds for using a variety of illegal debt-collection tactics. And it is now suing Navient, the nation's largest student loan company, for illegal practices against millions of borrowers, including severely injured veterans.
Corporate interests would prefer a weaker, less independent commission structure — not a strong, single director who can be held accountable. The CFPB’s enemies have also proposed to reduce the consumer agency to second-class status by politicizing its funding and cutting staff salaries below those of other big bank regulators.
Yet it would be a grave disservice to servicemembers and veterans, who voted for Trump in large numbers, to weaken the CFPB. Doing so also carries a huge political risk. That’s because cracking down on the financial industry is popular among voters, especially among the blue-collar workers who voted for Trump.
Only 39% of Trump voters want to see less financial regulation, while 37% want more and 24% say they are not sure. More than half of Trump voters want to leave the CFPB as is or expand its power, compared with 28% who want to limit its power or shut it down.
There is no public outcry to scale back the watchdog agency’s important work or to fire Cordray, whose term of service ends in July 2018. No independent agency head has ever been fired for cause. Making Cordray the first one would be akin to declaring war on consumer protection.
A rigged system is what led to the financial crisis. Giant financial institutions had the ear of financial regulators and ordinary people suffered tremendously. A strong consumer watchdog protects our troops and helps to unrig the system, making it work better for regular Americans. In the real world, the world outside the Washington Beltway, most Americans support having a strong financial regulator on their side.