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. KeithTexas

    Just the way the Republicans like it, no consumer protections. Explain to me why, when there is something to protect the people that the Republicans are against it. Elizabeth Warren should be up there now saving our money and getting us the protections we need.

    December 4, 2011 at 9:07 pm | Report abuse |
  2. Fanny Farquair

    Good old Ronny indeed was a democrat...before he decided to run for Gov of Cali, when he promptly went over to the Dark Side.

    December 4, 2011 at 9:10 pm | Report abuse |
  3. Fanny Farquair

    @Henry Miller:
    May you lose everything you own to every scam and every crap law ever made. YOU. Nobody else. Just you, a typical republican that is so selfish that they would rather see the elderly people who built up this country kicked to the curb than to have a protection agency in place that would protect them from people just like YOU! If you are so gd smart, none of this would affect you anyway. Have a little respect for the people who aren't as greedy, can't you?

    December 4, 2011 at 9:18 pm | Report abuse |
  4. ConcernedNetizen

    Tim Geithner is a tool, and Hank Paulson is a criminal. I don't care what kind of lip-service they offer. They will sell us all out in the end.

    December 4, 2011 at 9:18 pm | Report abuse |
  5. ConcernedNetizen

    Tim Geithner is a tool, and Hank Paulson is a criminal. I don't care what kind of lip-service they offer. They will sell us all out in the end...

    December 4, 2011 at 9:19 pm | Report abuse |
  6. byronwhitez

    To find a great refinance rate, you should talk to at least one national mortgage lender, one local lender, a credit union and 123 Refinance. Also ask your friends which bankers and brokers they have used.

    December 5, 2011 at 1:27 am | Report abuse |
  7. Gwen Stefani

    Anyone who knocks on a door to try and get someone to refinance, especially if the person who answers is 91, deserves to have their nose broken when that door is slammed firmly in their face.

    December 5, 2011 at 1:41 am | Report abuse |
  8. Alan Lidstone

    Why would anyone expect the Republicans who actively supported the malfeasance of ignoring any oversight of Wall Street, investment brokers, investment banks, and commercial banks that directly led to the financial sector meltdown of 2008 to actually support any consumer protection activity in 2011?

    December 6, 2011 at 3:29 pm | Report abuse |
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