The Consumer Financial Protection Bureau has seen a tragic downfall. Waging a war against payday moneylenders and services like cash advance loan, services which were highly valued by consumers, the agency grew increasingly unpopular among the masses. The public, however, were not the only ones who developed a dislike towards the federal agency which was supposed to be the watchdog of Economic activities in America.
The U.S. Court of Appeals for the District of Columbia Circuit used the following adjectives to describe the Consumer Financial Protection Bureau:
- The court accused the agency of having an Unconstitutional structure.
- Called the structure of the agency wholly departing from the traditional and historic ways. of agencies functioning in America.
- Declared the agency, inherently ’Un-American’.
The appellate court adjudged that Director of the Consumer Financial Protection Bureau, Richard Cordray who was appointed by ex-president Mr. Barack Obama, could only be sacked from his position by the president of the United States of America and that too for fair reasons. In the eyes of the court of law, implementing such a rule wielded too much power in the hands of the director. To question the federal agency’s staggering shortage of answerability, the court canceled the for-cause provision, denotating that Director Richard Cordray could now be impeached by the President of the country at all times and for any reason.
It showed a newer side of a progressively influential federal agency with abundant amounts of baggage. Representative Sean Duffy went on-record saying that the Consumer Financial Protection Bureau had been peppered with accusations of discernment based on a worker’s ethnicity, age, gender, and even sexual preferences.
The Consumer Financial Protection Bureau is in a clutter—from claims of discrimination against its workers to the extensive list of crippling fiscal principles it persistently keeps rolling out. No other trade is more beleaguered than payday moneylenders, who distribute to millions of low-earning American citizens in the requirement of liquidity with short-range advances. Director Richard Cordray had himself said that the federal agency did not want moneylenders to be mistreating their privileged access to their customer’s financial accounts. As Senator Elizabeth Warren, the Consumer Financial Protection Bureau’s sternest supporter in Congress said – Payday moneylenders who shape commercial models around tricking people in an endless circle of debt were flinging stones at a dying man. She had also mentioned that the federal agency had sworn to formulate new regulations to confront questions regarding low-dollar loaning.
So far, the hypothesis that payday debtors are stuck in malicious debt cycles has little pragmatic support. A 2009 study from Clemson University found that neither the legality of payday lending nor an increase in the number of loan stores led to higher rates of bankruptcies—backing up earlier research from Dartmouth College and the Federal Reserve Bank of New York. Professor Michael Maloney, who co-authored the study, argued the following: According to him. Payday advances appeared to intensify the well-being of customers by permitting them to survive unforeseen expenditures or disruptions in revenue. He also appealed that payday advances were not hurtful for their customers.
The present regulations overriding short-range credits already indemnify that clients be aware of the terms and charges of taking these loans, while the deal remains fast and clear. Availing services provided by Payday moneylenders is not the greatest cheap choice, but its admiration speaks to the easy-to-comprehend charges.
In the end, the Consumer Financial Protection Bureau’s failure to realize public demand – the need for services like cash advance loan and the need for allowing payday money lenders played a major role in the federal agency’s downfall.
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