Consumer Financial Protection Director Richard Cordray said the bureau fully intends to be "the cop on the beat" taking on the "four D's" of debt traps, dead end markets, deceptive marketing and discrimination.
"The upshot is that we want everyone to know that we fully intend to be the 'cop on the beat' that was envisioned when the financial reform law was enacted," Cordray said in a speech at the University of Michigan Law School Friday.
"In the years ahead, we plan to use all of our various tools – our supervision, enforcement, and rulemaking authorities, along with our consumer education initiatives – as appropriate to address issues in the consumer financial marketplace," he added.
Cordray cited payday lending as a debt trap for consumers. Products marketed as short-term solutions to immediate needs can be risky for consumers, he explained.
"People in a tough situation with nowhere to turn may think their only option is to use such products," he said. "But if they get trapped in one of these loans, the fees alone can eat up all the money they can afford to repay, forcing them to keep on borrowing, over and over again."
Cordray noted, "Although we recognize that these loans can be helpful to people if they are used responsibly, we must make sure that consumers can get the credit they need without jeopardizing or undermining their finances."
The CFPB is currently in the late stages of deciding how to formulate new rules to reform the payday lending market, according to Cordray.
"We are also the first federal agency to supervise payday lenders and make sure they comply with federal consumer financial law. Last November, we took our first enforcement action against a payday lender, Cash America, one of the largest small-dollar lenders in the country," he said.
This summer, the CFPB took action against ACE Cash Express, "another large payday lender, for pushing payday borrowers into a cycle of debt," Cordray said.
"And, just last month, we sued an online payday lender, the Hydra Group, which was running an illegal cash-grab scam, he told the University of Michigan Law School audience.
Cordray also said discrimination might be the most damaging problem the CFPB is currently focusing on in the marketplace.
"The greatest challenges some consumers face are rooted in unlawful treatment based on prohibited characteristics like race or national origin. So we are seeking economic justice and the right to equal treatment in the financial marketplace based on individual merit and responsibility," he said.
Cordray said public disclosure of information could be a powerful tool to address discrimination in lending.
"We are taking steps to expand transparency about people's access to credit in the mortgage market by requiring more information to be disclosed to the public under federal law," he said. "This information will help the public know more about how lenders serve their communities, and will allow easier identification of lending patterns that may be discriminatory."
The House Financial Services has held a series of hearings with former and current CFPB employees on allegations of discrimination at the bureau. As a result, the bureau has reformed its performance evaluation system after racial disparities in the ratings were revealed.
In September, the CFPB completed compensating employees who received a three or four out of five on reviews in 2012 and 2013.
The CFPB said it spent between $5 million and $5.5 million to retroactively grant these individuals the highest ratings.
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