High School Students Discover The Big Secret About Consumer Financial Protection

"That's it!" nan woman exclaimed. "That's what happened! That's what my family’s large concealed was!" 

In Economics class, my seniors were learning astir nan 2008 financial crisis and nan Great Recession. We watched clips from nan movie "The Big Short" illustrating really banks utilized teaser rates to lure group into buying homes lenders knew they astir apt couldn't afford. Surprised by my student’s reaction, I asked her to show america her story. 

"When I was little, my parents bought a house. It had a yard, and I moreover had my ain room. It was wonderful, but moreover then, I sensed thing wasn't right. My migrant parents didn't gain overmuch money. They had ne'er gone to college — my mom was a waitress, my dada was a cook.   

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"We lived successful a crowded apartment. Then, each of a sudden, we moved into what felt for illustration a palace, a mansion. It was a miracle.  

Young group are learning that they request nan oversight that comes pinch nan Consumer Financial Protection Bureau. (Credit: iStock)

"Two years later, it was gone. We near successful a hurry, packing up everything and moving into a garage, past yet backmost into an apartment. 

"For years, I asked my parents why we had to time off that beautiful house. They wouldn't talk astir it, truthful it was ever a large mystery. Until now."  

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Like millions of Americans, erstwhile her parents were offered nan chance to bargain a home, they leaped astatine it. Banks were making fishy loans and putting them into owe bonds. The standing agencies gave nan bonds bully ratings, and banks sold them to unsuspecting investors.  

Her parents’ teaser complaint expired a mates years later, and their monthly costs skyrocketed. They couldn’t afford the caller payment and location prices had dropped, truthful they were upside down. They couldn't pay, they couldn't sell, truthful they walked distant nether threat of foreclosure. 

My students were amazed and kept asking really nan authorities could’ve allowed banks to do this.  

Today, this is simply a very applicable question. In guidance to these wide Wall Street abuses, nan Consumer Financial Protection Bureau was created successful 2010 pinch nan transition of nan Dodd-Frank Wall Street Reform and Consumer Protection Act. The CFPB has oversight authority over banks, owe companies, payday lenders and backstage acquisition lenders. Its first director, Richard Cordray, said nan CFPB emphasizes mortgages, in installments cards and student loans.  

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Trump has called nan CFPB’s unit a "vicious group" that is "woke" and "weaponized" and under nan caller budget the CFPB will lose almost half its funding. It has besides been targeted by nan Department of Government Efficiency. 

The CFPB claims it has provided consumers almost $20 cardinal successful relief via monetary compensation, main reductions connected loans, and canceled debts. It has besides assessed $5 cardinal successful civilian penalties.  

California Democrat Rep. Lateefah Simon speaks arsenic legislature Democrats and CFPB workers clasp a rally to protestation nan closing of nan Consumer Financial Protection Bureau extracurricular its office connected February 10, 2025, successful Washington, DC. (Photo by Jemal Countess/Getty Images for MoveOn) 

At times, companies backmost down and resoluteness problems retired of fearfulness of CFPB action. No more — the Trump management has cut back the CFPB’s enforcement actions.  

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The administration dismissed 22 enforcement cases against awesome banks and others — involving complete $3 cardinal successful alleged harm to consumers — that were pending successful January. According to Reuters, 2 user organizations opportunity Trump’s "rapid pullback … has costs Americans astatine slightest $18 billion in higher fees and mislaid compensation for consumers allegedly cheated by awesome companies."   

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CFPB Enforcement Director Cara Petersen resigned successful protest, explaining, "I person served nether each [CFPB] Director … ne'er earlier person I seen nan expertise to execute our halfway ngo truthful nether onslaught … nan Bureau’s existent activity has nary volition to enforce nan rule successful immoderate meaningful way." 

As I thatch my economics students immoderate of nan basics of user finance, they are somewhat bewildered. Their disorder demonstrates nan CFPB’s value.  

The CFPB claims it has provided consumers almost $20 cardinal successful relief via monetary compensation, main reductions connected loans, and canceled debts. It has besides assessed $5 cardinal successful civilian penalties.  

For example, nan CFPB enforces the Credit CARD Act of 2009, which mandates credit paper companies divulge to cardholders nan ramifications of only making nan minimum monthly payment. I show a in installments paper measure which has a $10,000 balance — they’re amazed that, arsenic nan container successful nan area of nan measure indicates, it will return 23 years and almost double nan existent equilibrium to salary it off.   

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For young people, junk fees deed difficult — I get letters from erstwhile students shocked astatine really overmuch they are charged, and astatine a clip erstwhile they are financially vulnerable. Last year, nan CFPB moved to adjacent loopholes on overdraft fees and credit card late fees, and cap them astatine $5 and $8 respectively. The Trump management is eliminating some caps.  

Between young group and nan financial institutions they inevitably interact with, location exists a immense powerfulness imbalance. Young group request a vibrant, effective CFPB to thief level it. 

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