Opinion: The Consumer Financial Protection Bureau serves the public well

Billionaire Elon Musk and California venture capitalist Marc Andreessen have sparked a debate about what role government we should have — but it might not turn out the way they hoped. They don’t like government agencies that prevent companies like theirs from ripping off consumers.

They especially hate the Consumer Financial Protection Bureau, which was created 14 years ago. But most voters in both major parties support his work.

Musk and Andreessen recently made their point publicly. “Delete the CFPB,” was Elon Musk’s declaration concise political position on a conspiratorial story on “The Joe Rogan Show” about how Sen. Elizabeth Warren (D-Mass.) is using the office to debank anyone who disagrees with her, especially Silicon Valley entrepreneurs.

The attacks carried out by the two men resemble what Wall Street banks and predatory lenders said before the bureau’s creation in 2010. Jamie Dimon, CEO of JPMorgan Chase I tried to strangle him in the crib during the congressional debate over its creation and now boldly presents its highly profitable $4 trillion bank as a bank victim of regulation. Payday lenders took the case to the Supreme Court in an attempt to defund the agency (they lost). Most financial institutions belong to lobbying groups that have sought to gut the bureau.

These industries really hate the Consumer Financial Protection Bureau because, frankly, it’s doing its job. Congress gave the bureau enforcement powers to defend consumers, and companies led or influenced by Musk and Andreessen were the first victims. In a 2016 example, the agency sued a startup backed by Andreessen, Oakland-based LendUp, after flouting federal law. Ultimately, the office close the business in 2021 following repeated violations that included changing the terms of existing loans.

Andreessen is also an investor in San Francisco-based Synapse, a banking-like company that wiped out life savingsas reported last month. No charges have been filed – yet.

PayPal, with which Musk was closely involved, also was sanctioned through the office.

Tech moguls may hold grudges when justice is served, but the 118,101 LendUp customers who received more than $40 million of their money thanks to the Consumer Financial Protection Bureau surely feel differently. These people are not alone.

Since its creation, the agency has recovered more than 21 billion dollars in restitution and cancellation of debts for tens of millions of consumers. Recently, in just a week, the office came back $1.8 billion to 4 million consumers who had been scammed by a group of credit repair companies scattered throughout the western United States. Protections created by the Bureau prohibiting unfair fees, charges, and terms for financial products have saved billions more.

So yes, Andreessen may have felt a little salty after LendUp was shut down by the Consumer Financial Protection Bureau. And yes, businesses that defraud their customers are rightly more likely to be shut down or “unbanked,” if Andreessen wants to use that term. But the bureau also advocates for consumers who are actually account deprived, such as those who are suddenly cut off from their accounts because of their race or ethnicity.

As in the case of “Black Panther” director Ryan Coogler, not every case involves a call to the police to banking while black. The office handles the most insidious cases, such as when companies systematically close their accounts for discriminatory reasons, without any outside evidence of wrongdoing. In fact, after the agency received many complaints Regarding account closures and freezes, it created a rule – which will come into force soon – to supervise digital payment applications and stop illegal bank withdrawal.

Indeed, the bureau’s director, Rohit Chopra, has explicitly called for a banking system that does not penalize identity or speech. On the podcast Organized moneyChopra recently said: “We need to do more to end debanking and ensure that people actually have the right to have all their law-abiding activities flow freely through the banking system. »

Musk’s attack on the Consumer Financial Protection Bureau hinges on his new role as one of President-elect Donald Trump’s point men to fight government shrinkage. In theory, this program appeals to an anti-bureaucratic and libertarian trend in American politics—a sentiment that has ebbed considerably since its heyday in the Reagan years, given what Americans learned from the thrift and savings debacle. credit, predatory practices. credit card companies, payday lenders and, of course, the 2008 financial crisis and the Great Recession. Voters like government agencies that work well and work for them. There’s a reason why proposals to change Social Security are known as the third rail of American politics; the public relies on this program just as we rely on consumer protection rules.

My organization researched what voters think about the mission of the Consumer Financial Protection Bureau and found support between Republicans, independents and Democrats. Standing up to Wall Street and predatory lenders and recouping ill-gotten gains on behalf of the little people is very popular. Other investigations confirm this observation.

In the months and years to come, the new president, his elected officials, and congressional Republicans will likely attempt to take down a government institution that has done remarkable things for millions of families.

Musk and Andreessen are at the forefront of a fake populism that hides an agenda that will unfold over the next four years and benefit the rich at the expense of everyone else. They can launch a campaign against the Consumer Financial Protection Bureau, but they can’t change the facts or draw the battle lines: On one side are a handful of Wall Street bankers, payday lenders, and billionaires of Silicon Valley, who make money by breaking the rules. rules. On the other side are the vast majority of Americans, who benefit from and appreciate the crucial work of the office – but lack the megaphone of a billionaire.

Christine Chen Zinner is a senior policy advisor at Americans for Financial Reform.