Why We Need The Consumer Financial Protection Bureau
As the battle to confirm Richard Cordray to lead the Consumer Financial Protection Bureau (CFPB) continues, it helps to remember why such a bureau is needed. Jean Yin has a nice summary of the key issues behind the empowerment of the CFPB.
Whether consumers receive adequate disclosures is one thing, but whether they can then make rational decisions is another, even if they have the benefit of full disclosure.
The first reason that a CFPB is needed is that it is clear that banks and credit card companies do not disclose all terms to their customers and won’t do so absent some credible threat of punishment if they don’t. I buy this and think this is enough of a reason to support the CFPB and Cordray’s confirmation. The second reason that Yin mentions is that consumers may not be able to act in their own best interest (and this debate has its roots in the behavioral economics I blog on occasionally). This one is much trickier and I’m still figuring out how I feel about it.Click here for reuse options!
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