by Miles Unterreiner
The financial crisis that crippled the U.S. economy in 2008 created images most Americans thought they’d never see: panicked bankers and stockbrokers milling about in New York headquarters as billions in assets evaporated overnight; Senator John McCain temporarily suspending his presidential campaign to make an emergency trip to Washington to address the crisis; international corporate giants like AIG accepting multi-billion dollar government bailouts; years of slippery financial prestidigitation by investment banks being laid bare on every news channel.
But the crisis’ worst effects took place far from Wall Street, as everyday Americans saw their jobs, mortgages, and livelihoods disappear amid the roiling economic havoc. The irony, however, is that the financial services sector that triggered the Great Recession is also one that provides many of the tools Americans have relied on to rebuild their finances in the years since: credit cards, bank accounts and home loans.
How America can benefit from a robust financial services sector that also avoids exploitative and dangerous practices? Empowering a consumer watchdog with the sophistication to understand the intricate and arcane world of financial services and the wherewithal to grasp the real challenges facing ordinary Americans in the financial marketplace is a good start.
That’s where the Consumer Financial Protection Bureau – created by the Dodd-Frank Wall Street Reform Act in the aftermath of the 2008 crisis – comes in. Dedicated to protecting consumers, the CFPB has used both centralized expertise in Washington and broad outreach to consumers across the country to lend a helping hand to aggrieved consumers.
We’ve written in our four reports on the CFPB’s Consumer Complaint Database about the importance of the CFPB’s connections to the consumers it serves. Recently, however, the CFPB took another step toward building connections with citizens by launching an ambitious pilot partnership between the agency and local officials in a number of cities.
In January, CFPB Director Richard Cordray described the partnership to the U.S. Conference of Mayors in Washington, D.C.:
“The financial crisis showed us how irresponsible lending can assault the foundations of stable communities, with the damage taking many years to repair,” began Cordray. “We have spent the last five years digging out from under all of that.” Allying with local officials, he said, would result in local complaints about financial products being forwarded to the Bureau for analysis and response, relieving a heavy burden from city officials and bolstering the ability of the CFPB to address consumer complaints. “You can count on everyone at the Consumer Financial Protection Bureau,” concluded Cordray, “to seek out ways we can be of further help to you and your cities.”
With only a few years under its belt, the CFPB is living up to the promise consumer advocates originally held for the agency. By building partnerships with local officials and further expanding its reach, the CFPB is taking that promise to a new level.