SAN ANTONIO - It's a powerful consumer watchdog agency created by President Obama to keep banks in line after the financial crisis. Now Texas and ten other states are suing to get rid of the Consumer Financial Protection Bureau.
Cassie and Jeremiah Campbell always made their house payments on time, but when things got tight three years ago, they asked their bank for a mortgage modification. The couple says their bank told them to purposely fall behind on their payments in order to qualify.
Jeremiah Campbell says they were told by the bank, “You have to be behind, whether it’s no payments or a little bit less, you need to get behind on your mortgage for us to be able to do anything for you.”
The Campbells say when they did as they were instructed the bank denied the modification and foreclosed on their house. Now living with their parents, the Campbells say the federal government needs to protect consumers like them.
“There definitely needs to be someone policing the banks because they're not doing it themselves, and we don't have a voice, we tried,” Cassie Campbell told us.
After the financial crisis - as part of its reform of Wall Street - the Obama administration created the Consumer Financial Protection Bureau. A brand new agency tasked with cracking down on predatory lending practices and making banks more responsive to consumers.
The bureau forced lenders to make their credit card and college loan agreements easier to understand. It also required them to verify income and employment before approving a mortgage.
However, Texas and ten other states have joined a lawsuit to dismantle the bureau, saying it has too much power and is harming small banks and businesses.
Community and regional banks say the bureau and the regulations it enforces unfairly punish them for the sins of the big Wall Street investment banks, and have taken away their flexibility to loan money to deserving small businesses.
Eddie Aldrete, Senior Vice President of San Antonio's International Bank of Commerce, says lenders have had to turn away longtime customers because they don't fit the bureau's rigid requirements.
“The irony is that government in its wisdom decided to create a bureau to protect consumers and it's had the exact opposite effect,” Aldrete said.
The State of Texas says the CFPB puts too much power in the hands of un-elected bureaucrats. Consumer advocates say the bureau needs more power if it's going to change the way the banking industry does business.
