This op-ed originally appeared in the Saturday, September 7, 2019 edition of The Hill.
Imagine that your city’s water treatment facility announced tomorrow that it would scale back its work. Instead, the authorities would offer online classes and put up posters around town to teach city residents about contaminants and filtration. With slogans about “empowering consumers,” they would urge residents to make their own choices about the water safety level that’s right for them, based on individual health needs and taste preferences.
People would surely protest. It is both foolish and cruel to put the onus on ordinary citizens to handle an issue that requires professional training to fully understand and that can devastate people’s lives if handled poorly. It seems cynically designed to relieve city administrators — and the businesses that impact the city’s water supply — of their responsibilities. Yet this is exactly what’s happening today in the consumer financial marketplace at the federal level.
President Donald Trump’s head of the Consumer Financial Protection Bureau (CFPB), Kathy Kraninger, has laid out her vision for her five-year directorship. So far, Kraninger seems to think about consumer financial protection the same way our apocryphal city authorities think about water treatment. Rather than protecting us from the financial industry’s dangerous practices, she plans to educate us all about how to protect ourselves.
Kraninger announced: “Our first tool is education … [E]mpowering consumers to help themselves, protect their own interests, and choose the financial products and services that best fit their needs is vital to preventing consumer harm and building financial well-being.” Kraninger’s plan emphasizes pamphlets and websites about saving money and balancing checkbooks at the expense of the trained investigators, financial experts, and attorneys previously tasked at the CFPB with identifying illegal practices and prosecuting the banks that engage in them.
Having studied financial literacy education extensively, I would suggest that the head of the only federal regulator devoted to consumer protection in the financial services space is driving the agency in the wrong direction.
She is sending the message that it is your job to steer around the deceptive, unfair, and abusive practices of the financial services industry — if you can.
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