What To Expect From The New Consumer Financial Protection Bureau

Government regulation is uniformly criticized. That is, until a tragedy causes us to realize that regulation can sometimes be wise. The reverse is also true. Deregulation is usually applauded until its effects are felt. Consider deregulation of the airline industry a couple decades ago. Until deregulation, Panama City had east-west jet service to Tallahassee, connecting to Orlando and to New Orleans. Deregulation resulted in less air service for a long time, and when we got more back, we found ourselves on commuter planes. The merits of regulation and deregulation can be honestly debated.

The new Consumer Financial Protection Bureau has been created to enforce consumer finance regulations, to help create others for our protection, and to take on companies who deceive us with fees and marketing. No doubt, its work will be debated as well. The agency, created as a result of the financial crisis of 2008, has existed for 14 months. During that time, prime areas of investigation have been credit card lenders and mortgage servicers. It is a highly-aggressive federal bureau that has already changed the mortgage application, foreclosure processes, and what fees people are charged.

A case in point is the fast refund it accomplished for 2.5 million customers from Capital One Financial, the fifth-largest credit card issuer in the U.S., after it charged the company in July for tricking customers into buying add-on services like identity theft and credit protection. The agency is also investigating insurance companies accused of paying kickbacks to banks for part of their customer business, costing us as consumers more money, and student loan companies thought to be overcharging some students and their parents more than they should while subsidizing others. Next week, I'll tell you what to expect from the bureau as it takes on debt collectors starting January 2.