Five years ago, American consumers got an important ally.

In July 2011, the Consumer Financial Protection Bureau was launched with a mission that’s contrary to the Latin phrase “caveat emptor,” or “let the buyer beware.”

For the CFPB, headed by former Ohio Attorney General Richard Cordray, it’s more like “let the businesses beware.” The agency was created to help clean up the financial mess left behind after the housing market crash and the Great Recession.

Since its inception, the agency has addressed issues in the mortgage industry, challenged banks on outrageous overdraft fees, taken on payday lenders and, just last week, issued proposed rules to rein in rogue debt collectors. Consumer education is also an important focus.

The CFPB is the brainchild of Sen. Elizabeth Warren. During her speech last week at the Democratic National Convention, Warren made early reference to the agency.

“Democrats fought for a strong consumer agency so big banks can’t cheat people,” she said. “Republicans and lobbyists battled us every step of the way. Five years later, that consumer agency has returned $11 billion to families who were cheated. And Republicans? They’re still trying to kill it.”


I loathe bringing in partisan politics, but having seen and worked with consumers who have been taken advantage of, I believe the bureau is worth keeping around despite its critics.

I recently spent some time with Cordray and a number of top staffers at the bureau to discuss the CFPB at its five-year mark. In the next few columns, I’ll go over what the agency has done and how you can better utilize its resources. For now, here are some questions I put to Cordray:

Q: What are you most satisfied about regarding the work the bureau has done?

Cordray: We have made real change in the way financial institutions treat consumers. Companies know that they have to comply with the law, that somebody is looking over their shoulder to make sure they do that.

Q: Two years ago, Consumers Union wrote an open letter encouraging the bureau to do more to help credit card consumers. Some of the reforms the consumer-advocacy group urged were “prohibiting retroactive interest-rate hikes on balances and requiring better disclosure of rates, fees, and payments on your monthly statement.” Has the CFPB done enough in this area?

Cordray: We issued a report on the credit card market where we highlighted risky practices including the potential for these promotions to hit consumers with back-end pricing. We reported that consumers with lower credit scores are paying more for these products, but they do so at the back end of the transaction, with annual interest rates of around 25 percent. As part of our work overseeing the credit card market, we will continue to monitor these practices.


At the same time, we’ve done significant work to stamp out illegal credit card practices for marketing, billing and enrollment for credit card add-on products. That work has resulted in over a billion dollars in relief to millions of harmed consumers.

Q: After the CFPB issued its proposed rule on payday loans, some lenders said they would find new ways to issue these costly loans. How do you think the rules will be successful in protecting consumers?

Cordray: We want consumers to be able to access credit that helps them, not harms them. Our proposed rule would establish strong consumer protections that will keep borrowers’ short-term needs from becoming long-term burdens.

We are certainly aware of the history of lenders avoiding regulations at the state or federal level, and we have included a broad anti-evasion provision in the proposal. We also have an ongoing inquiry into possible future evolution in the marketplace, and we’re looking at risks to consumers posed by loans that fall outside our proposal’s coverage.

Q: Were there any issues you had hoped to address during the first five years that you are still working on?

Cordray: As a new agency, it’s critical that we continue building a direct relationship with American consumers. We hear from consumers and accept their complaints. We offer a variety of tools and resources to help consumers navigate the marketplace and make major financial decisions from paying for college to owning a home. We’re also working to curb potentially harmful practices with strong new consumer protections for payday lending, debt collections and arbitration clauses that block people from suing consumer financial companies.


We also need a watchdog agency for consumers who should know better. Because knowing better means being better informed.

Michelle Singletary can be contacted at:

Twitter: SingletaryM

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