CFPB: Treading Lightly and Speaking Softly

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It's counter-intuitive to raise interest rates and slather even more debt onto troubled borrowers, but that's exactly what lenders often do. They're in business to make money, not to make sense. We don't get to make up the rules of the game--they do. We just want them to play fairly.

The good news: A Consumer Financial Protection Bureau whose sole designation is to act as a consumer's watchdog has opened its doors. The bad news: The watchdog hasn't yet grown its teeth --or bark.

Today's guest blog is written by Joshua Heckathorn, President of, a free resource for anyone who wants to learn more about credit and compare hundreds of the best credit cards online. He resides in Seattle and holds an MBA and B.S. in finance.

CFPB: Treading Lightly and Speaking Softly

The Consumer Financial Protection Bureau (CFPB) officially opened its doors a little over a month ago. So what has the bureau been up to? Unfortunately, not much at all.

As you may have heard, the CFPB's main purpose is to keep a protective eye out for consumers by guarding them from products like credit cards for bad credit with high fees, risky mortgages, or other financial products that could be considered not-so-consumer friendly. Supporters like to refer to the CFPB as a "new cop on the beat". However, there's one huge problem at the moment. This "new cop on the beat" is still without a Director.

Elizabeth Warren, the Harvard professor who was the mastermind behind the creation of the CFPB, parted ways in early August after it was clear she would never become the Director. Ms. Warren is now pursuing a possible Senate bid in Massachusetts. Her presence at the CFPB will surely be missed.

While President Obama did nominate Richard Cordray, the former Attorney General of Ohio, to become the CFPB's new Director, the Senate Banking Committee has managed to push the hearing for his nomination off to sometime in September. It's become apparent that the Republicans will continue to do everything in their power to make sure the CFPB remains without a Director and without a voice for as long as possible.

In the meantime, the CFPB is treading lightly and speaking quite softly as it seeks to find its place in Washington D.C. At least the website is up and running though, and it appears to be focusing its early efforts on managing consumer complaints regarding credit cards.

As of late July, consumers could visit and log specific complaints about their credit cards. The idea is that the bureau will then forward the complaints to the credit card companies, provide tracking numbers, and keep consumers updated on the status of the investigations.

Unfortunately, The CFPB has even had trouble managing something as simple as logging complaints. Earlier this week it was announced that a technical glitch had caused the complaints they've received to not filter through to the credit card companies. That's a big problem! Of course, they're working on getting the problem fixed, so stay tuned.

I had great hopes for the CFPB, and I'm honestly still trying to be optimistic about its ability to be effective in the future. Losing Elizabeth Warren was a tough blow though, and the longer the bureau goes without a Director the more I think it will begin to fade away into uselessness.

What do you think? Will the CFPB be able to overcome its early growing pains and emerge as a true enforcer of consumer protections in the financial industry?
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