Donald Trump Will Knock Down the Legacy of Elizabeth Warren Regarding Payday Advance Loan

Elizabeth Warren, Massachusetts Sen., gave an impassioned speech at an invitation-only lunch organized by the AFL-CIO after the presidential election was conceded by Hillary Clinton. She praised the criticisms of President-elect Donald Trump about Wall Street and his promise to enhance infrastructure spending before pouncing on what it meant to rebuild the economy. Warren said that the Americans want the big banks to be held accountable, but that will not happen if they sack Dodd-Frank and the cops who have the responsibility of watching such banks like, CFPB (Consumer Financial Protection Bureau). According to her, if the Republican Party and Trump turn payday advance loan institutions and big banks loose, they will be gambling with their economy and bringing it all down.

The kind of stance that will be taken by the Trump administration is quite unclear as of now, but he has struck populist chords, said that he wants to bring Dodd-Frank down and overturn individual provisions. It can be safely assumed that the accomplishments of Warren under the Obama administration are going to get a prime slot in front of the wrecking ball of Trump.

The legacy of Obama is also the legacy of Elizabeth Warren, such as the adoption of the Consumer Protection Act, Dodd-Frank Wall Street Reform and CFPB. There are also proposed standards that require financial advisers to put the interests of the clients before their own. These rules and standards are not liked by Trump.

The reconstituted retirement savings regulations and the CFPB are specifically designed to safeguard Americans from the worst of the financial services sector. Trump’s approach is going to show how much he actually values the financial welfare of all those who voted for him.

The threat to the CFPB is quite simply really. The financial services sector dislikes it and wants it to go away. For years, the Republicans in Congress have brought this issue to the fore. Sen. Ted Cruz had introduced a bill to terminate the CFPB in 2015 by saying that it does very little to protect the consumers. However, a poll conducted by the left-leaning Americans for Financial Reform revealed that 2/3rds of Americans approve of the CFPB even after knowing the arguments against it.

It is likely that another bill similar to Ted Cruz’s is going to be introduced within the early days of the 115th Congress. However, that is not the real threat to the existence of the agency. First, the Democrats are going to rally to save the agency. The Republicans may have a majority in the Congress, but they do not enjoy dominance in the Senate. A Texas Republican, Rep. Jeb Hensarling, has a proposal to reformulate the CFPB to Consumer Financial Opportunity Commission, which would be governed by a 5-member commission and funding would be subject to approval by the Congress.

But, the financial structure of the CFPB is designed to prevent the Congress from exerting their influence. The 5-member commission is viewed upon as a grid-lock.

Recently, a federal circuit court declared that the setting-up of the CFPB is unconstitutional and the President can fire the CFPB head anytime he wants. There is no need to wait till the end of the appointment term of the director, Richard Cordray.

Owing to the current initiatives of the agency to do away with mandatory arbitration clauses and reign in payday lending, there is enough heat for the CFPB to be dissolved. Rep. Debbie Wasserman Schultz made an attempt to undercut the agency’s proposal to regulate the industry and only backed down when Hillary Clinton spoke out in defense of the CFPB.

A number of court cases are ongoing that are challenging the laws. Even though long-established precedent shows that new administration is going to continue to defend the changes even if they disagree, good news is that Trump does not care of precedent. Also, unlike the CFPB, there are few people in the public who actually have any clue about the fiduciary changes or what impact will it have on the bottom line if it is done away with.

The constituencies that work with Warren to protect the re-invigorated retirement rules are the same financial services industry that had opposed them. In order to make sure that they do not have to face with the new payday advance loan regulations, a lot of firms have spent millions to be compliant with the regulations. JP Morgan Chase and MetLife are among those firms. But, politics can make strange bedfellows. Over the next 4 years, you can expect to see a lot of changes.

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