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Congress Made the Wrong Choice: Destroying Financial Reform

Amy Traub

Today the U.S. House of Representatives voted to gut financial reform. Members of Congress wrapped up their vote in high-flying language about “choice,” “freedom,” and “jobs,” but there was no hiding the underlying substance: razing the financial reforms enacted to prevent a recurrence of the 2008 financial crisis and uprooting the successful Consumer Financial Protection Bureau (CFPB).

What’s at stake in the fight over the CHOICE Act? This video tells part of the story:

As the video makes clear, the CFPB offers critical consumer protection to all Americans. Yet some communities are particularly vulnerable to financial abuses—and more in need of strong consumer protection from the CFPB.

From deceptively-marketed, high-interest mortgages to payday loans that trap borrowers in a cycle of debt to harassment from bill collectors,  communities of color are consistent targets of discrimination and predatory behavior. The vast and growing racial wealth gap that leaves the median black household with only 6 percent of the wealth owned by the median white household (while the median Latinx household holds only 8 percent of the wealth held by white households) means that black and Latinx families have less wealth to draw on in the event of financial shocks like job loss, an emergency car repair, or an unexpected medical bill. The lack of a financial cushion increases families’ vulnerability to predatory lending, making strong consumer protections especially important.

The upshot? When Congress acts to undermine the CFPB’s power and effectiveness, it is communities of color that are hit hardest.  

As Demos noted in our statement on the bill, the Financial CHOICE Act amounts to little more than a lavish giveaway to campaign donors on Wall Street at the expense of American consumers and the overall stability of the nation’s financial system. It’s a leading example of how our nation’s public policies are skewed towards the interests of top donors—including the financial interests that poured $1.2 billion into elections during the last campaign cycle—and away from working families and people of color as a whole. Members of Congress who voted for the bill have revealed where they stand.

The Financial CHOICE Act is expected to die in the Senate, as it should. But there is still danger that harmful provisions weakening the CFPB and undermining financial reform could be inserted into other legislation and enacted into law. Consumers—and anyone standing up for their interests—must be vigilant.