De-Constructing Consumer Protection

This story may (or may not) be familiar to you.  It concerns a man who was not an experienced politician, but who was elected President of his country.  He emerged out of a background that produces its own heroes and celebrities, in a broad sense of those terms.  Early on, he probably didn’t even plan to be president of his country. He did have thoughts of running for office, but, was not taken seriously by a major party and was somewhat content on attracting publicity.

However, following a crisis of a collapsed economy, a growing fear of continued recession and some messy situations involving killings of innocent students, threat of increased terrorism, and the disgust of many people with established parties, new possibilities for “outsiders” was growing.  With a political slogan that captured some imaginations and growing support, our subject threw his hat into the presidential pool, deciding to run for President.  In his case, this act may have contained a plethora of factors and personal reasons, but one thing was clear.  Support in polls was beginning to surge.  Against several candidates, and one already well-known and prominent, our man emerged as the candidate of his chosen party, although many of the established leadership of his chosen party came out against his candidacy. 

With a message of being on the outside, wanting to clean up the inside, this candidate tapped into the anger and disgust of many with a clearly populous message, appearing to many as the only real option for change.  Unexpectedly, he won.

In his inaugural address (following on his previous discourse) he painted a picture of a profound crisis; of an economy on the brink of collapse, a society wracked by violence, corruption, terrorism and drug trafficking.  He pledged to bring the country out of the (miserable) state it was in by means of drastic reforms an d measures, and to step-up the fight against terrorism of many forms.  Unfortunately, he was quite vague in terms of how this would all be accomplished.  The traditional media distrusted him and he them.  He was unsparing in his attacks upon the political elite, describing it as a corrupt oligarchy that was ruining the country. 

The newly elected President got off to a rocky start.  Congress failed to pass any significant legislation in his first months.  He did not seem up to the task of responding specifically to threats of nature or of political origin, or to terrorism for that matter.  ‘He not only lacked the experience with the intricacies of legislative politics, he also lacked the patience for it.  He preferred, as he often bragged, ‘to govern alone from his laptop.’ 

 Instead of working with the leaders of Congress, he lashed out at them, calling them ‘unproductive.’  He even attacked some judges.  Perhaps most troubling, he often bypassed Congress turning instead to executive decrees (orders).  His commitment to democratic values and institutions became weak.  At some points, the courts began to push back, declaring parts of some of his decrees as unconstitutional.  

Soon many of his critics, including establishment politicians, judges and the media, began routinely denouncing him as ‘authoritarian.’  There was some talk of impeachment.  But our subject doubled down and declared that he would overcome the walls that separated his country from progress toward greatness.  “Less than two years after his surprising election the long-shot outsider had become a tyrant.”

Except for that last sentence, you probably thought you were reading about Donald J. Trump.  In a way you were, but the actual story as told in the book titled:” How Democracies Die” by Steven Levitsky and Daniel Ziblatt, is about: Peru’s Alberto Fujimori, who probably didn’t plan to be a dictator or tyrant.

There are points related to this story that need to be identified.  One is that there are some commonalities that tend to exist among the personalities that are inexperienced populist outsiders, often at one or the other far side on the political spectrum.  They tend to be anti-establishment, and claim to represent the Voice of the People, asserting that others do not.  They tend as well to be involved in some way in waging a war against a corrupt, entrenched, and conspiratorial ‘elite.’  They also tend to promise to get rid of the elite (‘drain the swamp”) or minimize their power, status and standing, while returning Power to the People.  They often get involved in an assault, attack or minimization of democratic institutions (intelligence services, other parties, and the Press, for instance). 

From the experiences of other democracies around the world and throughout history, the authors found enough data to provide something to help identify would--be autocrats and their “remarkably similar strategies for subverting democratic institutions, constituting a sort of ‘litmus test’ for emerging politicians who want to hold office, but probably should never be allowed to do so.  They identify four “behavioral warning signs” to especially notice, claiming that a politician who meets just one criterion is a cause for concern; and Donald Trump meets the profile of all four!

1)    the candidate rejects in words or behaviors the democratic rules of the game

2)    the candidate denies the legitimacy of opponents

3)    (s)he tolerates or encourages violence as legitimate

4)    (s)he is willing to curtail civil liberties of opponents (including the freedom of the Press to criticize, investigate or to call to account the words or actions of the candidate; or, to jail “crooked” opponents!)

Another major point.  We usually think of democracies dying at the hands of men with guns. In fact, such coup d’états accounted for nearly three out of every four democratic breakdowns during the Cold War (and there were at least 14 of them).  The authors make the very important point that “there is another way to break a democracy; less dramatic but equally destructive, carried out by those brought to power in the first place.  Some of these dismantle democracy very quickly, as did Hitler.  More often, though, democracies erode slowly, in barely visible steps. 

Across our world, there has been a change.  “Military coups and other violent seizures of power are rare.”  Since the end of the Cold War, most democratic breakdowns have been caused by elected governments themselves subverting democratic institutions.  And that backsliding begins at the ballot box, according to the authors. But its invisibility is hidden under a veneer of democracy while its substance is being “eviscerated.”

Moreover, the authors make the telling point that many such efforts to subvert democracy are “legal” in the sense that “they are approved by the legislature or accepted by the courts.  According to the authors, they may even be portrayed as efforts to improve democracy – making the judiciary more efficient, combating corruption, or cleaning up the electoral process.  Media continues but under duress and pressures that lead to self-censorship.  Citizens continue to criticize government and to bring their grievances forward, but not always without negative consequences such as individual tax audits.

People do not always realize what is happening, and therefore continue to believe that they are living under democratic values and institutions.  They ignore warning signs and denounce those who protest democracy’s erosion and who denounce government abuse.  For many, Democracy’s erosion is almost imperceptible.  This leads the authors to ask the question: “how vulnerable is American democracy to this form of backsliding?” 

They claim that the major political parties are democracy’s filters, which makes them the gatekeepers as to who is admitted and receives party legitimacy, and who remains out of the running because they are too radical for democracy to survive their policies and their actions.  They point out some failures for both parties, but, emphasize that the GOP began a recent pattern of failure to be such gatekeepers beginning with their support of tea party candidates.  The results have visited upon us a constitutional crisis in the form of an authoritarian leader who despises many democratic values (such as equality and justice for all), compliant followers who ignore the ethical values necessary to a democracy’s survival (such as truth-telling and accountability), and captured branches of government (legislators and judges) cow-towing to the leader (Fuhrer?).

 “This is how elected autocrats subvert democracy – packing and ‘weaponizing’ the courts and other neutral agencies, buying off the media and the private sector (or bullying them into silence) and rewriting the rules of politics to tilt the playing field against opponents.  The tragic paradox of the electoral route to authoritarianism is that democracy’s assassins use the very institutions of democracy – gradually, subtly, and even legally – to kill it.”

Let us conclude this somewhat sad commentary by pointing to what is happening in one area of government to which we rarely give enough attention, but which is of major import in terms of the well-being and protection of our citizens. Slowly but surely under the authoritarian Trump regime, this major function of government is being attacked, assaulted, de-constructed, and perhaps destroyed. Allow me to alert you to its minimalization and warn you of its demise.

It is referred to variously as Consumer Protection, Citizen advocacy, a process for bringing grievances and appeals against government mis-behavior, abuse and neglect.  It falls under the protection of Citizens (and others) within the purview of the General Welfare, and certainly falls neatly under equal opportunity to pursue happiness.  It encompasses much that government should be doing faithfully and completely, but often fails (or is obstructed from doing so).

Let us be quite clear that authoritarian attack on consumer advocacy can take many forms in terms of tactics.  It can involve the appointment of a certain type of leader, deregulation, budget-cutting, denigration in terms of descriptions and references, as well as the turning of its constituencies against its actions and nature.  Nor can we dismiss the less obvious tactics of privatization, or devolvement to state control. There are many ways to de-construct, and the authoritarian Trump knows and uses them all.

Rich sponsors, donors and lobbyists not only want freedom from regulatory restrictions, they want citizen advocacy entities destroyed because oligarchs do not favor citizen groups (or government) telling them how to run their enterprises, how to treat their customers, or how they must manufacture and market their products and services.

 Nor do those captains of industry want ordinary citizens telling government what it ought to do to sustain a constitutionally-mandated mission of citizen protection, the opportunity for well-being, and pursuit of equal opportunity and equal justice for all. 

Finally, here is one 'huge' example of quiet undermining of democratic institutions that few are giving much attention:  The Trump regime is intent on undermining citizen advocacy groups, consumer appeal/grievance boards (and even whole departments!) that enable ordinary citizens to have access to grievance mechanisms within government. In fact, it has long been a desired outcome for the Republican Party along with the deconstruction of government’s regulatory power.

The Consumer Financial Protection Board (CFPB) -- created as part of the Dodd-Frank financial reform legislation of 2010, which was passed in response to the unscrupulous behavior of many companies on Wall Street. (Washington Post).  Before the CFPB existed, there was no single government entity tasked with protecting American consumers from predatory practices in the financial industry. Financial entities such as mortgage lenders, credit card companies, debt collectors, credit reporting firms, and payday lenders faced few rules and scant oversight.

“The CFPB has been under attack since its inception mostly by Republicans who have argued that the financial services industry is already heavily regulated.  We don’t even have to go back as far as the Great Recession to see that financial companies need more, not less, oversight.

A few months ago, the CFPB fined Wells Fargo $100 million for — unbeknown to its customers — opening hundreds of thousands of unauthorized bank and credit-card accounts.  In its short existence, the watchdog agency has forced corporations to return more than $11.7 billion to consumers who had been ripped off by greedy banks and lenders.  The CFPB has a complaint portal that works with consumers to get a response from companies. It has handled more than 1 million complaints involving financial products and services. The agency is also using its database to identify trends in unfair financial practices (which is) a great service to consumers.

In its short existence, It’s netted nearly $12 billion from financial firms to provide relief for 29 million consumers, including about $3.8 billion in direct compensation. Almost $400 million of that came without consumers having to lift a finger, thanks instead to its supervisory actions. Firms have also been made to pay $600 million in penalties. (Michelle Singletary Columnist November 15, 2016)

How would you reward that agency?

If you're President Trump, the answer is to slash its funding by 23%, get rid of rules "that unduly burden the financial industry” and support the weakening of its organization by making it less independent (like limiting its enforcement powers and making its director able to be removed by the President for “cause.”)

By November of 2017, here is some of what happened to the CFPB:

·       Trump brought in his budget director, the ultra–fiscal conservative Mick Mulvaney, who has called the CFPB a “sad, sick” joke, to lead the agency.

·       His budget zeroed out its funding completely over time, and proposed other ways to significantly change it.

·       His Treasury Department released a report arguing that the CFPB’s “unaccountable structure and unduly broad regulatory powers” have “hindered consumer choice and access to credit, limited innovation, and imposed undue compliance burdens, particularly on small institutions.”

·       The House passed the CHOICE Act in June (2017), which would strip the CFPB of its authority to supervise, police, and examine financial institutions; bar it from overseeing payday loans; and let the president fire its director at whim.  Once enforcement powers are removed, the agency is essentially gutted.

By February 2018, the Washington Post was reporting this:  “Over the past few weeks, the administration has dismissed enforcement actions, delayed the payday lending rule and halted the investigation of Equifax. Calling for the CFPB to act with more “humility,” Mulvaney has taken up the cause of financial industry cheaters who have done — and continue to do — great harm to the American people.”

Shifting the burden of regulation and citizen advocacy back onto citizens hardly makes them freer. Far from a recipe for liberty this is, instead, a prescription for chaos. An underregulated market for consumer goods and services will lead to inefficiencies, as individuals and groups scramble for assurances of quality; greater inequality will result, as only those with the requisite resources can acquire those assurances; and acute bouts of economic paralysis, as diminished confidence will dampen consumer demand.

“The White House’s insistence that deregulation is liberty enhancing just goes to show how warped today’s political discourse is. Deregulation and de-construction of consumer protection agencies “privileges the worst products, producers, and service providers over consumers, workers, and responsible businesses. All of these latter individuals benefit from clear, evidence-based regulations enforced by capable and conscientious public servants. Deregulation is inefficient, too, as the government is uniquely positioned to realize economies of scale in regulating for all us.” (Slate - Jon D. Michaels is professor of law at the UCLA School of Law; Rajesh D. Nayak is deputy director at the National Employment Law Project).

“It's been clear since our businessman-in-chief took office that he had no love for federal consumer watchdogs — and that his administration was more than happy to dance to the tune of financial-services industry lobbyists who wanted the CFPB dead.

"It's open season on consumers," said Sally Greenberg, executive director of the National Consumers League. "The most predatory actors — payday lenders, student loan companies, the debt collection industry — can operate with virtual impunity from federal regulators at the bureau."

Recently, banks and other companies falling under the CFPB's oversight were asked to assess "the overall efficiency and effectiveness of its supervision program and whether any changes to the program would be appropriate." (We’re not talking about consumer input here!)

Mulvaney is already off to a great start in terms of emptying the bureau's coffers by requesting no new funds for the current quarter. Instead, he'll deplete a "reserve fund" intended to help pay for investigative work, which the bureau won't be doing much of anymore.

By 2020, the Trump administration wants the CFPB to no longer be funded by the Federal Reserve. It wants funding to be controlled by Congress, which would mean more influence by industry lobbyists.

Christine Hines, legislative director for the National Association of Consumer Advocates, said Trump's budget and Mulvaney's strategic plan make clear their aim "is to hamstring the CFPB and make it impossible for it to fulfill its mission to protect consumers from financial rip-offs." (By David Lazarus Feb 20, 2018—LA Times)

And that, my friends are two stories in one Blog: 1) a tyrant-in-waiting, just like others, is eating away at our democracy, and 2) it may look like we are functioning as we always have, but quietly, almost imperceptibly, Trump is de-constructing consumer protections.  You will soon find yourself with no place to lodge a complaint, bring a grievance, or appeal a case of government abuse or neglect. Look much deeper, at the EPA, the FTC, the Veterans’ Administration, the Education Department.  Be aware of the consumer boards that are under attack under the ACA (Obamacare), Housing, and HHS.

This is NOT OK.  It is a WAR on agencies and norms meant to protect the People.  YOU are NOT being PROTECTED!