Cordray of CFPB Should Be Sacked by the Next President for Unfair Regulations on Cash Advance Loan Business

CFPB, an agency formed by Dodd-Frank to put pressure on the cash advance loan industry, was a rogue government agency until recently when the courts compelled them to maintain some amount of accountability. The US Court of Appeals for the District of Columbia Circuit gave authority to the president of America to fire CFPB’s director, Richard Cordray. Cordray was called by the court as the single most authoritative and powerful official in the entire US government (other than the president). This was because of the bureau’s structure that did not allow the director to be removed by the president. But, things have changed now and this practice has been deemed as unconstitutional.

According to the ruling of the court, the president now has the power to fire the director of CFPB. Since Donald Trump was of the opinion that overregulation need to be controlled, Cordray deserves to be removed from this position because of his arbitrary mandates. Trump has called for repealing the regulations in general and also showed interest in breaking down much of what Dodd-Frank has done.

Throughout his tenure and to date, Cordray has been accused of red tape by the leaders of credit unions, as well as, community banks.

Credit Union National Association and numerous other credit union associations wrote a letter to Cordray stating “baffling” and “extremely troubling”. They argued that the regulatory burdens have spiraled the costs of the credit unions to $4 billion in the year 2010 and to $7 billion in 2014. The letter warned the director of CFPB of hurting short-term lending industry and making it difficult for them to offer affordable financial products and services to their customers.

The CEO of State National Bank of Big Spring (Texas), Jim Purcell, said that the bureau only gives rise to regulatory uncertainty. It does not take a lot of input from the public, even though the regulations are meant to protect them. Purcell’s bank feels that the expenses of the new mortgage rule by CFPB is very high and will lead to hindering the issuing of new mortgages.

A lot of rules proposed by CFPB are allegedly for hurting the credit unions and community banks. For instance, the recently proposed rule about putting a lot of pressure on payday lenders. But, if the short-term lending business is affected, millions of Americans will lose their access to credit.

With the implementation of the proposed rule of the CFPB, community banks, credit unions and other such financial institutions will be impaired from performing their primary function. They will not be able to offer loans for the borrower to fulfill his or need pressing need.

The CFPB mandates have also managed to stifle FinTech firms. Even though Cordray had said some nice things to say about them, his rules did not echo the same sentiment.

The rule lumps in brand new digital wallets and payment apps like, PayPal and Venmo. This is meant to be used as prepared cards. According to the new rules, every little detail about how the fees are disclosed to the color of the font need to be disclosed to the customers.

The problem is that this rule compels the innovators to reimburse the consumers for human errors similar to that of credit cards. However, new payment apps may not be able to absorb these expenses as large credit card banks are able to.

If that is not all, Cordray has shown a general ignorance when he was questioned by the CFPB’s elected officials about the spending and priorities of the bureau. In fact, he replied “what does that matter to you?”

Americans are waiting for the next president of American to ask Cordray to vacate his position and let the cash advance loan industry operate in peace. It is the short-term lending market that helps millions of Americans take care of daily needs.


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