While one might assume that an organization that has the words “consumer protection” in its name would have a hard time eliciting attack ads, the CFPB has always found ways to defy expectations.
The above ad ran last night (Nov. 10) during the Republican presidential primary debate on Fox News. For those who cannot watch at work, the video portrays the CFPB as a distinctly Stalinist-looking bureaucracy mindlessly stamping “Denial” on car, home and personal loan applications and then blithely handing them out to devastated consumers who form an interminable line.
The message of the ad: The CFPB exists to get between consumers and lenders, shield them out of access to credit and, on the whole, protect consumers to death. The call to action: Write your congressman and ask him to stop the out-of-control CFPB.
The ad got some attention, especially from its target, Massachusetts Senator Elizabeth Warren (Warren’s face is pictured on one of the red banners in the background of the ad), who set off a Twitter storm in response.
From there, Warren accuses the GOP of going after the CFPB to please its Wall Street “buddies” and save them millions. She also lauded the program’s successes and popularity among those whom it has helped.
Which, while possibly true, doesn’t actually answer the ad’s accusation that one of the ways the CFPB “helps” low-income workers avoid debt is by simply making it impossible for any lender to legally take on the risk of loaning them any money. Plus, as Karen Webster pointed out in a recent commentary, the CFPB, with its opaque rules and extreme enthusiasm of fines, also pushes banks away from the risk of innovating. Also, because banks are able to derive less income from lending but are not likely to simply decide to make less income, the bureau’s presence leads to a tendency to push up costs on things like ATM fees, which are generally bad for consumers.
The tone of the commercial is a little ridiculous. Like Senator Warren or not, she makes an entirely valid point that comparing her to Stalin is a bit much; for all its reported excesses, the CFPB has never sent anyone to the Gulag. But the point the commercial is making, that the CFPB and the Dodd-Frank regulations that created it have had the effect of making credit products less available to the people the agency was created to help, is not ridiculous.
Which is why today many are wondering if the ad, by a group called the American Action Network, with its over-the-top Orwellian dystopian tone, may do more harm than good for its cause. The tone is easy to knock down, American Banker points out. The factual claim about consumer credit it is after is not quite right. It will likely help Elizabeth Warren raise money (because it attacks her directly), and it is funded by a company currently under investigation by the CFPB.
So, while a conversation about the purpose and practices of the CFPB may be about due in the U.S., it is safe to say that this ad won’t be the force that kicks that conversation off.
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