The Consumer Financial Protection Bureau: Like a mechanic with no tools?
U.S. Treasury Secretary Timothy Geithner is pushing the Senate to confirm a director to run the Consumer Financial Protection Bureau.
December 4th, 2011
09:06 AM ET

The Consumer Financial Protection Bureau: Like a mechanic with no tools?

Tim Geithner might be Endia Eason’s new best friend. If he lived in Cleveland, she’d probably bake him a pie.

“My pies are the best pies in town – they’ve been saying that for years,” Eason says. “I make apple, sweet potato, peach and cherry.”

So why would a 91-year-old woman in southeast Cleveland want to bake a pie for the U.S. treasury secretary?

CNN's Libby Lewis reports on how Geithner helped the "best" pie baker in Cleveland

Because lately, Geithner has been publicly nudging Senate Republicans who have hamstrung a new consumer protection agency – created to protect homeowners like Eason, and to stop what happened to her from happening to other people.

Obama renews push for consumer bureau chief

Eason nearly lost her home because a mortgage broker talked her into a $50,000 loan.

The Consumer Financial Protection Bureau is the cornerstone of the sweeping Wall Street reform law known in shorthand as Dodd-Frank. It opened its doors in July. But it’s been operating with one hand tied behind its back. Senate Republicans have vowed not to confirm a director for the agency.  They say the law puts too much power in the hands of a single director. And they say the agency is not accountable enough to Congress.

Without a director, the agency can’t regulate many financial services companies that aren’t banks: payday lenders, mortgage brokers, and consumer finance companies, for instance. Some of those companies were blamed for some of the worst abuses in the recent housing crisis.

“Now I know there are people in the Senate who have concerns about the scope of authority of this agency,” Geithner told reporters last week. “But I would ask: Who are they protecting? What are they protecting? Whose interest are they protecting? It’s not consumers.”

Steve Bartlett heads a group that represents major financial institutions. Speaking at a conference of the Consumer Federation of America,  Bartlett cast the Senate Republicans’ opposition this way:

“The Constitution says the president shall sit with the advice and the consent of the Senate. What seems to be missing is the advice part. So there is an impasse at this point.”

Mark Seifert, who heads a housing counseling group in Cleveland, said the Senate gave plenty of advice – before it passed Dodd-Frank.  He said the consumer agency Dodd-Frank created has a simple premise: keeping people from getting ripped off.

“It really comes down to – would you put your own grandmother in this loan program?”

Seifert says without a director, the Consumer Financial Protection Bureau is like a car mechanic  without tools.

“The mechanic says, 'Well, anything you need fixing that takes a screwdriver, I can do. But if it requires a ratchet, sorry, there’s not much I can do.' That’s what Congress has done with the CFPB. They don’t have a ratchet.”

Without a director, the CFPB can’t rein in mortgage brokers like the one who approached Endia Eason and her husband, a retired postal worker, in 2001.

The broker knocked on their door and told them he knew the city had cited them because their front steps needed repairing. Seifert says the broker told the Easons they’d go to jail unless they took out a loan.

He talked the Easons into borrowing $8,000 to repair their steps, and their garage and their roof too. And he convinced them to open a line of credit – backed up by the deed on their home. And he promised to help them get the repairs done.

He was so friendly, Endia Eason made him dinner.

The Easons showed up to sign for an $8,000 loan. They didn’t know about all the hidden fees the broker had packed in, Seifert says.

“By the time they knew it, they were hit – where their house is worth $50,000 and their loan is near $50,000,” Seifert says.

The Easons signed the contract, because the broker said it was too late to back out. And they believed him.

When they fell behind on the payments, the lender started the foreclosure process.

Seifert’s housing group persuaded an executive from the mortgage lender  to meet the Easons and tour the neighborhood.  The company decided to write off part of the loan, and back off foreclosing on the Easons.

The mortgage broker, on the other hand, got $4,000 from the deal – and walked away. He hadn’t broken any consumer protection laws.  Seifert says it’s this kind of situation that the CFPB needs a ratchet to fix.

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Filed under: Economy
soundoff (99 Responses)
  1. Dennis

    If this were the Fat Wall Street and Bankers Huge Bonus and Bail Out Protection Agency, the Republicans would have this enacted, funded and their cronies put into place so fast it would make your head spin.

    December 4, 2011 at 4:26 pm | Report abuse |
    • sidneyhop

      ha...SO TRUE!!!

      December 4, 2011 at 4:42 pm | Report abuse |
  2. hippediva

    It always has been.

    December 4, 2011 at 4:32 pm | Report abuse |
  3. us1776

    Republicans always want to help their crooked crony rich buddies.

    No way does the GOP want to see any consumer protection from the predatory financial industry.

    .

    December 4, 2011 at 4:37 pm | Report abuse |
  4. banasy©

    @Common Sense(?)

    Apparently you missed the part where the article said SHE WAS 91 YEARS OLD!!!!

    Could you BE any more heartless?

    December 4, 2011 at 4:41 pm | Report abuse |
  5. banasy©

    @Common sense:
    May you get what YOU deserve.
    In fact, I'll pray on it.

    December 4, 2011 at 4:43 pm | Report abuse |
  6. banasy©

    @tasaad:
    All too true, and it's pathetic that people are soo judgemental about things they haven't a clue about.

    December 4, 2011 at 4:52 pm | Report abuse |
  7. Mike

    More shameless behavior of the Republicans, advocating for the wealth at the expense of the middle class, poor, elderly, etc. They are blocking the CONSUMER PROTECTION AGENCY, folks. Proof they don't care a wit for the concerns of the average American. Vote them out in 2012!

    December 4, 2011 at 4:57 pm | Report abuse |
  8. hope

    Shot in the butttocks!

    😀

    December 4, 2011 at 4:59 pm | Report abuse |
  9. marty rogers

    anybody who casts a single republican vote, who is not a Wall Street mogul, is really dumb. I mean, really

    December 4, 2011 at 5:06 pm | Report abuse |
  10. Mike

    @Common Sense, everyone else is calling you out - I'll add my voice. By your argument, the fault in any crime of fraud would be in the hands of the victim. And yes, by misleading people to think that they could afford such loans, those banks WERE committing fraud. I had been approached as well, and deflected them, but the most common misleading statement that they made was that for the variable rate loan, the rate was not likely to go up. They were actually not supposed to say that – so they were being not only unethical, but crossing over to fraudulent.

    December 4, 2011 at 5:06 pm | Report abuse |
  11. Mike

    Republicans are against the middle class. They have been so good at getting people to vote against their own interests that they are getting sloppy and rather brazen in their efforts to dismantle the support for the middle class in favor of the wealthy. The 1% wealthiest should vote Republican, as they have promised to make them richer. The rest of us should vote Democrat.

    December 4, 2011 at 5:11 pm | Report abuse |
  12. George Patton

    @marty rogers: he's just willfully ignorant.

    December 4, 2011 at 5:30 pm | Report abuse |
    • loathstheright

      No, he is just informed, and you're not.

      December 4, 2011 at 5:43 pm | Report abuse |
    • Twinkle

      GP was talking about Common Sense, and if you agree, you don't loathe th right, you ARE the right!

      December 4, 2011 at 9:35 pm | Report abuse |
  13. J R Brown

    I'm sorry but you can't create a government agency to protect people from being stupid.

    We don't need another all powerful government agency...we need to understand stup!d people are going to fall for bad deals. If you need proof, just look at the millions of mor0ns who think the lottery actually helps fund education instead of just padding the general funds of the states that have them.

    Who's protecting the stup!d people from falling for the GOVERNMENT'S scams??? Lotteries are a tax on stup!dity.

    December 4, 2011 at 5:38 pm | Report abuse |
  14. McMillian's Wife

    Notice what a pompous sillyman dooshbag Common Senseless sounds like. Notice he hasn't been back because hopefully some 91 year old granny put a gun to HIS head.

    December 4, 2011 at 5:39 pm | Report abuse |
  15. loathstheright

    Why of course, the republicans surely don't want anyone looking out for the public, their only concern is their corporate masters and the profits they reap by doing their bidding.

    December 4, 2011 at 5:42 pm | Report abuse |
    • Twinkle

      You speak with a forked tongue. You are a hypocrite.

      December 4, 2011 at 9:36 pm | Report abuse |
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