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Will the Consumer Finance Protection Bureau die under Trump?

(FINANCE NEWS) The CFPB has been making great strides in protecting consumers from big banks and foreclosure. With a new president, will all this change, or will the CFPB be able to continue their work?

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Waiting and speculation

With a new president elected, many citizens are expressing growing concern over a multitude of issues, from housing, to equal pay, and everything in between. While it seems to be a bit more prominent with President-elect Trump, this has certainly happened with every newly elected president. The American people want to see just what the new president will do: will he introduce reform? Will things stay the same? Right now, we’re all playing the waiting game, but there is one area in which we have a bit more concern: housing, more specifically the CFPB.

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We have long covered the Consumer Financial Protection Bureau (CFPB) and the different policy changes and reforms that have come down the road along the way. On the campaign trail, President-elect Trump vocally shared his dissatisfaction for the Dodd-Frank financial reforms. This makes us wonder what this could mean for the CFPB.

Is the CFPB in danger of being dissolved?

Of course, people opposing the CFPB is nothing new, but it has been making great strides in helping consumers fight back against banks. However, the threat to the CFPB doesn’t reside with President-elect Trump, but rather with the anti-CFPB legislators and the courts.

According to the Consumerist, anti-CFPB legislators have called for Congress to dismantle the agency entirely, but this would prove difficult, as it would likely require legislation that wouldn’t survive a Democratic filibuster in the Senate.

The Consumerist goes on to state that Ed Mierzwinski, of the U.S. Public Interest Research Group, noted anti-CFPB lawmakers would navigate around the possible filibuster by introducing smaller legislative efforts to slowly undermine the Bureau’s authority and its ability to enforce rules that have been deemed “too-restrictive” on the very banks foreclosing on consumers. The only difference now is that these lawmakers no longer, in theory, fear a presidential veto from President-elect Trump. A veto was a concern, along with a lack of majority numbers in the Senate, from President Obama.

Big banks take aim at CFPB

One of the most vocal opponents to the CFPB has been the Chairman of the House Financial Committee, Rep. Jeb Hensarling from Texas. Hensarling is also a potential nominee for Treasury Secretary in President-elect Trump’s administration. This could be detrimental to the CFPB.

Again, according to the Consumerist, Hensarling is also one of the most bank-backed members of Congress, second only to Paul Ryan, whose campaign received more contributions from commercial banks than any other House member.

Keep this is mind: Hensarling’s campaign and leadership PAC received around $1.9 million from the financial and real estate industries in the most recent election.

This accounts for nearly two-thirds of all money raised for the Congressman. This is pretty astounding, and it definitely explains why there is some worry regarding the dissolution of the CFPB.

The courts aren’t happy either

But as I previously stated, the major issues really aren’t with President-elect Trump or Hensarling; rather the big threat could be the courts.

The Director of the CFPB, Richard Cordray, has been a controversial figure since President Obama appointed him (after some protesting from Hensarling and others). As he was appointed for five years in 2013, he could remain Director while President-elect Trump is in office. However, there was a recent federal appeals court ruling that could undermine his position.

The Director of the CFPB is unique in that they cannot be dismissed at will by the president, unlike other agencies where there is either a multi-commissioner panel, or the authority to be removed by the president.

While this may seem unusual, it was put in place to prevent the pressure that regulated parties might try to exercise on the legislative or executive branches of government to get the Director of the CFPB removed.

The federal appeals court recently concluded that the CFPB’s structure is in fact unconstitutional because it gives one person too much authority, and said person is not directly answerable to the president. This could mean Director Cordray will be on the way out in January. If this happens, the law allows for his Deputy Director to assume the position.

However, it is more likely that the Trump administration will have a replacement in mind, and therein lies the problem and worry.

There is one more potential change to keep in mind: Congress wants to make the CFPB more accountable to lawmakers by having funds come through Congress, rather than independently from the Federal Reserve. This has been proposed before, but the potential for it to pass has never been greater than with this administration.

What will happen?

As of right now, the CFPB has paused all pending legislation in response to Trump’s victory.

Bank-backed lawmakers have tried to reform the CFPB before, but have not, by and large, been successful. Some long-awaited regulations, like arbitration rules, are still pending and will likely be dissolved if Cordray is removed from office.

The Hill reports that President-elect Trump has pledged to put a moratorium on new agency rule-makings once he takes office, which could prevent any pending regulations from getting passed.

While this is all still speculation, it seems quite likely that there will be some reform in the CFPB with a Trump presidency, but how much, or to what extent remains to be see for certain. With any luck, once President-elect Trump takes office, he’ll allow the pending regulations to pass, or at least examine them and the strides the CFPB has been making before disallowing them, or completely dissolving the CFPB all together.

What do you think? Will this be the beginning of the end for the CFPB?

#CFPB

Jennifer Walpole is a Senior Staff Writer at The American Genius and holds a Master's degree in English from the University of Oklahoma. She is a science fiction fanatic and enjoys writing way more than she should. She dreams of being a screenwriter and seeing her work on the big screen in Hollywood one day.

Business Finance

Will China’s new digital currency really compete with the US Dollar?

(BUSINESS FINANCE) It isn’t the first time that China has tried to compete with the dollar, but the release of a digital currency has lead some economists to raise red flags.

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Man holding phone in one hand and credit card in other hand, handling digital currency.

For decades the US has been the world standard for foreign trade. As of 2019, 88% of all trades were being backed by that almighty dollar, making it the backbone of the world economy. However, China may be sneaking in something new for digital currency. 

In the last few months, over 100k people were “airdropped” cold hard digital currency. This currency came from People’s Bank of China (PBOC), who has created a digital manifestation of the Chinese yuan. This is planned to run concurrently with its paper and coin playmates. Upon initial inspection, they resemble the same structure as Bitcoin and Ethereum. But there’s a major difference here: The Chinese government is the one fronting the money.

The suspected plan behind this is that the government plans to tightly control the value of the digital yuan, which they are known to do with the paper one as well. This would create a unique item within the world of cryptocurrency. Personally, I don’t think that any of this is going to go anywhere soon. Too many people still need hard currency but it does open up a unique aspect of currency that has only just started since debit and credit cards. It gives the government the ability to spy on its cryptocurrency users. Being able to monitor transaction flows can reveal things like tax evasion and spending habits. There is even the possibility of experimenting with expiring cash.

But how does this affect the US? There’s a method that has been used by Americans since WWII called dollar weaponization.  The exchange domination allows the US government to monitor how the dollars move across the border. Along with that monitoring they are actually able to freeze people out of global financial products as well. It’s a phenomenal amount of power to hold. 

The concern for economists is that the price fixing capabilities of this new currency as well as its backer being an entire countries government could affect everything about the global financial system. Only time will tell how true that turns out to be.

There are a number of possibilities that could come up honestly and they could fall flat on their face unless they put their entire monetary worth behind it. Only time will tell but some economists are already calling for DigiDollars from the American government. Another step into the future.

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Business Finance

A tiger shows its stripes: The growth of Tiger Global and their investments

(BUSINESS FINANCE) Tiger Global has been acquiring a load of tech companies – let’s talk about who they have and how they’ve been so successful.

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Two business partners shaking hands as part of a Tiger Global acquisition deal.

In 2003, Tiger Global was founded by Chase Coleman who began his career at Tiger Management (brilliant name choice). In the ensuing years the investing firm expanded to include private equity and venture investing. Today it’s hitting the charts at $65B with its employees (number at ~100) being the firms’ biggest shareholders.

Earlier this month, Tiger Global raised one of the largest pots of VC money ever recorded, coming in at $6.7B. These came from a list of occurrences and investments.

  • Roblox: A sandbox gaming startup, Tiger Global owned 10% when it went public in March and the value is hitting ~$38B+
  • Stripe: A fintech firm Tiger Global leaped onto this investment when Stripe announced a $600m rise in value at a $95B monetary evaluation of the company.
  • M&A wins: In 2020, 3 portfolio companies (Postmates, Kustomer, & Credit Karma) of Tiger Global were acquired in billion-dollar deals.

The tactics that Tiger Global stands by are well documented in a few different locations. One of the biggest that they push is speed. The deals that fly across their tables are completed in just 3 days, far outpacing other firms. When you are an investment firm hour are a time between success and failure. To keep up with these ideas, they have a pre-emptive approach to startups. Doing thorough research and throwing money at people before they even start looking for it. Knowledge is power and this lets them get their foot in the door faster than anybody else.

Resources and a monstrous war chest are 2 of the other factors that they set their claim to fame on. The numerous portfolio companies have high-priced consultants thrown at them for advice on a regular basis. These consultants just add to the success of the companies and keep things building. Where does this money come from? The stakeholders. The mountainous mounds of money that this firm keeps on hand is matched very few in the world. Scrouge McDuck would be hard pressed to keep up with these guys.

They also keep to long-term holdings as an approach to their methods. Unlike traditional VCs, Tiger Global operates public market hedge funds which provides price stability for startups since it doesn’t have to distribute funds after an IPO, unlike traditional VCs.

In the first quarter of 2021 Tiger Global has closed 60 deals, keeping with their hit the ground sprinting approach. They have bids on a number of different companies already as well (ByteDance, Discord, Hopin, & Coinbase). At least one of these reaches a value into the tens of billions. This company is set to be one of the fastest growing groups in the globe. Who knows where it will stop? Let’s wait and see, or join. Whatever hits your fancy.

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Business Finance

India bans cryptocurrency prior to releasing their own

(BUSINESS FINANCE) India is potentially planning to ban cryptocurrency — and instead, they’re planning to introduce their own version of it for purchase.

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Cryptocurrency coin on a phone open to a purchasing app.

Owning mainstream cryptocurrency these days is a bit like owning a pair of Crocs: Potentially lucrative (especially if you’re Post Malone), but mostly just weird. A recent report shows that India is planning on adding “illegal” to that list, possibly ahead of launching their own cryptocurrency in place of the banned ones.

The proposed law would also fine anyone found tradingor even simply owningbanned cryptocurrencies in India. Mining and transferring ownership of cryptocurrency would similarly warrant punitive measures.

CNBC notes that this law would be “one of the world’s strictest policies against cryptocurrencies” to date. While some countries have imposed strict laws regarding things like mining and trading cryptocurrency, India would be the first country to make owning it illegal.

Some talk of jail timeincluding sentences of up to 10 yearsfor cryptocurrency owners and users was floated by Indian lawmakers back in 2019, but there is no explicit indication that those terms would be present in this rendition of the bill.

To be fair to the lawmakers involved here, the bill wouldn’t be as cut-and-dry as “has bitcoin, gets fined.” According to the CNBC report, people who own cryptocurrency would be able to “liquidate” their earnings for up to six months preceding the bill going into effect. This would theoretically allow investors to hold onto their portfolios for a bit longer before having to cash out.

But that leniency might not matter anyway. It doesn’t take a genius to see that this move could do two dramatic things to the cryptocurrency market: Add yet another niche option for investors, and destabilize every other pre-existing cryptocurrency optionor, at least, make them less stable than they already were.

In fact, the simple introduction and threat of this bill could be enough for the cryptocurrency market to take a nosedivesomething that can’t be discounted as a factor in making this decision. Current reports put Indian-owned bitcoin values at roughly $1.4 billion, though, so it’s clear that the bill hasn’t had a deleterious effect at this point.

The fact that India’s central bank has plans to introduce a government-sponsored cryptocurrency of their own cannot be separated from this bill, either. While the official government position is that blockchain is to be trusted while existing cryptocurrencies are eschewed and dismissed as “Ponzi schemes”, it’s clear that at least part of this bill is motivated by a desire to thin out the competition.

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