Today marked a big victory today for fairness, economic justice and the notion that rules are to be obeyed, even by big banks. In its first major enforcement action, the Consumer Financial Protection Board has given Capital One, a major credit card company, a $210 million fine for deceptive practices. Of that fine, $140 million is going to be rebated directly to customers.
That’s what holding financial institutions accountable looks like.
According to today’s enforcement action, Capital One was targeting and exploiting people with lower credit ratings, pushing them into credit card products through dishonest marketing or even enrolling them without their consent.
The financial industry isn’t going to do the right thing out of the goodness of its executives’ hearts. It takes rules, and enforcement of those rules, to keep it in check. Strong rules give corporations like Capital One the incentive to do better.
That’s exactly why the financial industry and its allies in Congress fought so hard to keep the CFPB from functioning—by passing bills to try and defund it and particularly by blocking the nomination of its director, Richard Cordray. Now Cordray, the former Attorney General of Ohio, is on the job, and the CFPB is already working on a number of issues, including making mortgages simpler and fairer and reining in payday lenders. (CNN did a great story on the CFPB’s staff this week.)
This is why we passed financial reform, over strong opposition from the banks it would affect. This is why the CFPB exists in the first place—and Cordray put other financial institutions on notice today.