It didn’t get too much attention, but Citibank received some pretty awful news yesterday. The banking powerhouse was accused of pushing dubious credit card services, presented to millions of consumers in unfortunate ways (charging consumers during “free” 30-day trial periods, for example).
The Consumer Financial Protection Bureau, which exists thanks to Sen. Elizabeth Warren (D-Mass.) and the Dodd-Frank reform law, noticed the Citibank practices and went after the banking giant, accusing it of “deceptive marketing,” “unfair billing,” and “other unlawful practices.” Yesterday, Citibank cried uncle – it will pay $700 million to affected consumers, on top of $35 million in penalties.
A few hours later, Republican presidential hopeful Ted Cruz (R-Texas) issued an interesting press release.
On the fourth anniversary of the creation of the Consumer Financial Protection Bureau (CFPB), U.S. Sen. Ted Cruz (R-Texas) and Rep. John Ratcliffe (R-Texas-04) have introduced legislation to eliminate it. […]“Don’t let the name fool you, the Consumer Financial Protection Bureau does little to protect consumers…” Sen. Cruz stated.
The argument might even seem true, were it not for all of the success the Consumer Financial Protection Bureau has had in protecting consumers. Indeed, that’s very likely the point of Cruz’s new bill – the CFPB appears to be too effective for many conservatives in cracking down on financial-sector excesses.
But as the Obama administration’s Wall Street reforms celebrate another birthday, it’s not just the right-wing Texas senator looking to turn back the clock. Yesterday, much of the Republican presidential field emphasized their plans to scrap the Dodd/Frank law altogether.
Jeb Bush said yesterday on Twitter, “We should repeal.” Scott Walker and Marco Rubio used nearly identical language.
And on Capitol Hill, of course, GOP lawmakers remain committed to scrapping the federal safeguards and layers of accountability.
The political context is obviously familiar, but it shouldn’t be brushed aside too quickly – seven years after financial-industry recklessness and incompetence crashed the global economy, the Republican Party is absolutely convinced that it’s time to free Wall Street from many of its government burdens. These pesky layers of accountability imposed by Democrats are preventing Wall Street from doing what it wants to do, so, the GOP argument goes, Republicans are committing to rolling back the clock – to the conditions that existed shortly before the 2008 catastrophe.
If the Dodd/Frank system were actually imposing unreasonable burdens on well-intentioned financial institutions, the complaints might be worth considering, but the fact remains that Wall Street reform is an under-appreciated success story. The repeal crusade is misguided on political and policy grounds.