The Consumer Financial Protection Bureau (CFPB) is already starting to flex its muscle by proposing a rule that would place 175 debt collection firms and most of the credit bureaus including the big three, Experian, Equifax, and Transunion, under their federal supervision. This is the first attempt to put “non-banks” under the same sort of supervision as banks. CFPB Director Richard Cordray believes this will “restore confidence that the federal government is standing beside the American consumer.” He adds that he believes this approach will be more efficient than the “blunt instrument of lawsuits.”
Anybody that has had to deal with debt collectors know that many of them deserve the governmental oversight since they can’t seem to play by the rules on their own volition. FTC complaints and lawsuits have been filed in record numbers against debt collectors but that means the consumer had to endure a slew of abuse before seeing justice slowly served by our overburdened court system. Knowing that the CFPB is watching could help restrain the most atrocious of abuses and lighten the load on our courts with less lawsuits having to be filed. Of course, regardless of whether or not the CFPB’s oversight packs any punch, consumer debtors that wisely hire a reputable debt settlement attorney already avoid the abusive acts of debt collectors since once they’re represented by counsel, it is illegal for debt collectors to continue to contact the debtor.
The CFPB providing oversight over the credit bureaus could be extremely beneficial to consumers as well. Anybody that has tried to communicate with the credit bureaus regarding mistakes in their credit reports knows it can be difficult and time consuming. How the information on your credit report is boiled down into the FICO equation is a downright mystery. This should be a cause of concern to the American consumer. These companies have such a stranglehold over whether a loan applicant gets approved and if approved, in determining their interest rates – costing or saving a person tens of thousands of dollars. In essence, there is no way for the American consumer to check the power of these credit bureaus because by opting out only leaves you less able to get a loan and the best rates.
And, of course, the banks clearly aren’t looking out for the American consumer unless you count extending them credit cards with ridiculously high interest rates. So the catch-22 leaves our only hope with the CFPB. Hopefully, their proposed regulations don’t end up being all bark and no bite.