At a public meeting this morning, the head of the Consumer Financial Protection Bureau said the agency will focus on a handful of priorities in 2013, including "the evil of discrimination" that prevents minorities from receiving equal access to credit.
The other types of issues the agency will concentrate on, said CFPB Director Richard Cordray at an agency consumer advisory board meeting, are deceptive marketing of consumer financial products and services; debt traps; and a category that included debt collection, loan servicing, and credit reporting.
Cordray said the CFPB is also developing new technological tools, such as "Ask CFPB," an interactive database of 1,000 answers to common consumer questions. Plus, he said the agency's consumer complaint database and Project Catalyst, which seeks to promote consumer-friendly financial product and service innovations, have helped to fulfill their pledge to broaden public participation.
"Along with these initiatives, we are responding to an explicit challenge that Congress laid down for us by attacking the unique problems that confront special populations of consumers," Cordray said, referring to students, seniors, service members, veterans, and their families.
The CFPB enforces the Dodd-Frank Act, which makes it illegal to engage in unfair, deceptive, or abusive acts or practices in connection with consumer financial products or services. However, in some cases, Cordray said, "regulation may not be the answer because the law is already in place and is simply being disregarded."
Cordray said the increasing demand for short-term credit products, such as payday loan stores, often harms consumers who end up trapped in a cycle of debt. "The tell-tale sign of such products is that their success is based on a substantial percentage of users rolling over their debts on a recurring basis."
Finally, Cordray said "the evil of discrimination" hinders African Americans and Hispanics from having equal access to credit sources. "The statistics show very clearly that communities of color were hit especially hard during the financial crisis. All Americans saw drops in their household wealth, but African-Americans and Hispanics experienced the steepest drops," he said.
Two consumer lawyers who addressed the meeting raised the issue of forced arbitration clauses, which are contractual provisions in consumer financial products that specifically state consumers cannot sue them.
Thomas Domonoske, a Virginia attorney who represents the Legal Aid Justice Center, said that such clauses are "not negotiable with the consumer…If something is not negotiated with the consumer, the consumer has no choice."
The CFPB is currently conducting a study on the impact of pre-dispute mandatory arbitration clauses, and has the ability toadopt regulations on the topic if it decides they're warranted.