The resignation on Monday of Seth Frotman, the Consumer Financial Protection Bureau’s student loans ombudsman, is expected to be a major scandal. In an inflammatory letter, Frotman says the office’s political appointments “undermine law enforcement,” ending effective oversight of the student loan industry. He alleges that “current management” suppressed a staff report documenting “the country’s largest banks were scamming students on campuses across the country by charging them legally questionable account fees.”
But don’t expect the Trump administration to care. This is exactly what he wants.
Not really relevant
It is hardly news to announce that the CFPB is no longer working on behalf of the millions of Americans it was created to protect. Since President Donald Trump installed his Bureau of Management and Budget chief Mick Mulvaney – a longtime nemesis of the agency – as interim director, the CFPB has either stopped or reduced investigations into all kinds of bad behavior from the financial sector, ranging from payday loans to discrimination. auto loan policies.
Hardly anyone expects things to change if, as expected, the entire Senate approves Kathy Kraninger as the new CFPB director. Kraninger has virtually no consumer advocacy or legal experience; Rather, she stands out primarily for her pedigree as a good Republican soldier, helping to implement the Trump administration’s policy of separating migrant children from their parents at the U.S. border.
$ 1.5 T in student debt
Americans owe $ 1.5 trillion in student loans, more than double the $ 600 billion in debt owed a decade ago. Analysts say all of this money owed is making people save less for retirement and making it harder for those with student debt to buy a home. Yet the Trump administration appears determined to ensure that this money continues to flow unimpeded from consumer wallets to never-filled pockets in the financial services and corporate sectors. In its article on Frotman’s resignation, the Washington Post reports that CFPB staff discovered that a number of banks were charging students excessive fees on debit cards after an earlier crackdown on these unwarranted fees on debit cards. credit. But the law governing the annual report only requires the CFPB to publish its findings on credit cards, and Mulvaney has blocked publication of the findings on debit cards.
The allegations in Frotman’s letter are just the tip of a large iceberg. At the education department, Secretary Betsy DeVos, who is apparently surrounded by former lobbyists in the for-profit higher education sector, is enacting rules that will make it much more difficult for students to obtain a certificate. loan forgiveness when they claim to have been defrauded by colleges and universities that have misrepresented their offers and placement rates. DeVos’ department is also fighting attempts by a number of states to regulate the practices of companies seeking to repay federal student loans.
There is something particularly heinous about allowing people who have taken on student loans and other debt to complete their college education and be victimized by the financial services industry. These tickets, for the most part, were not acquired in the pursuit of transitory consumer goods. Rather, they are the result of an effort to improve their own lives. Letting the financial industry go after people seeking to achieve the American dream is a betrayal of unfathomable magnitude.