September 22, 2023

Bucks Blog: The Most Common Consumer Complaints

Consumer complaints to the Consumer Financial Protection Bureau were most often about mortgages and credit cards, according to a summary the agency issued Thursday.

The federal agency began taking complaints about credit cards in July 2011 and has gradually added other categories, including mortgages, bank accounts, private student loans and other consumer loans. Most recently, it added credit reporting as a category, and is working to add others including payday loans and debt collection.

The agency this month expanded its publicly available searchable database of complaints, and is encouraging analysis of the data. The database now contains about 90,000 complaints, the agency said. The agency also published a “snapshot” of the more than 131,000 complaints received from July 2011 through February of this year. (The number of complaints in the summary is larger than in the database because it includes complaints that were referred to other regulatory agencies,  found to be incomplete or are pending further review, the agency said.)

The summary shows that about half of the 131,000 complaints received concern mortgages — as might be expected, given the extended fallout of the housing crisis. The most common complaints concerned problems consumers encountered when they were unable to make payments, like issues with loan modifications or foreclosures.

“The complaints indicate consumer confusion persists around the process and requirements for obtaining loan modifications and refinancing,” the report said, particularly on issues involving submission of documents, payment trial periods and allocation of payments.

Roughly a quarter of complaints received by the agency overall related to credit cards, with billing disputes the most common problem.

More than 80 percent of the total complaints have been sent to companies for review and response. Companies have responded to 95 percent of complaints received, the report said.

The database includes companies’ description of actions they have taken to address the complaint. A company may label the complaint, for instance, as “closed, with monetary relief.”

Consumers can review and dispute the company’s response, and the agency uses that feedback to decide if the complaint warrants further investigation.

“By sharing these complaints with the public, we are creating greater transparency in consumer financial products and services,” Richard Cordray, the agency’s director, said at a public hearing in Des Moines, where the expansion of the database was announced.

Have you complained to the Consumer Financial Protection Agency? What was the result?

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High & Low Finance: New Dodd-Frank Rules Muddled by Congress That Wants It Both Ways


As the rules get written for Dodd-Frank, the financial reform law that Congress enacted last year, the essential contradictions in the law are being left to regulatory agencies to sort out. Whatever they do, you can depend on legislators to say the regulators are ignoring Congressional intent — or at least the intent of one faction or the other.

Consider the Volcker Rule, named for its chief proponent, Paul A. Volcker, a former chairman of the Federal Reserve. It prohibits banks from engaging in proprietary trading.

If that sounds straightforward to you, you may not have read the rule, or the new 298-page effort by regulators to figure out how to apply it. That effort produced howls of anguish from those who liked the idea of the rule, and similar reactions from those who hated it.

Some might say the equal disdain shows that the regulators are trying to steer a middle course. It might be more accurate to say they were given an impossible task.

A similar fight is going on over “skin in the game” rules for mortgage risk retention. The law says that lenders who sell mortgages to investors should retain some of the risk.

That seemed wise after the bad loans fiasco that helped bring down both the banking system and the economy.

But the law also says that those rules should not apply to especially safe mortgage loans, called qualified residential mortgages in the law. It is up to the regulators to figure out which is which.

In each case, those who want tougher rules point to the risks that came home all too clearly in 2008 and 2009. Banks and some of their customers say the economy, and bank profits, will be hurt if rules bite too deeply.

The Volcker Rule, as enacted, “generally prohibits banking entities from engaging in proprietary trading,” as the regulators stated in their opus this week. But the law goes on to provide exemptions for such things as “trading on behalf of customers,” “risk-mitigating hedging activity” and “underwriting and market-making activities.”

And there are exceptions to the exceptions. As Mary Schapiro, the chairwoman of the Securities and Exchange Commission, explained, “These otherwise permitted activities are not permitted, however, if they involve material conflicts of interest, high-risk assets or trading strategies, or if they threaten the safety and soundness of banking institutions or U.S. financial stability.”

In other words, you can’t tell the difference between a prohibited activity and an allowed one just by looking at what a bank did; you have to instead divine its purpose. Then, even if the purpose is worthy, you have to decide if the risk is too high.

The logic behind the Volcker Rule is that banks are special, and should not be able to do some of the things other market players are free to do. Banks are special because they benefit from government-insured deposits. Big banks are even more special because if they gamble and lose, it may be the government that ends up with the loss, via a bailout.

But banks also provide a lot of services beyond just taking deposits and making loans. Customers want those services to continue to be available.

The rules proposal this week does not claim to be complete. The document lists 383 questions for those commenting on the proposal to consider in recommending changes. Some of those questions have multiple queries. Here’s one example:

“Question 19. Is the exchange of variation margin as a potential indicator of short-term trading in derivative or commodity futures transactions appropriate for the definition of trading account? How would this impact such transactions or the manner by which banking entities conduct such transactions? For instance, would banking entities seek to avoid the use of variation margin to avoid this rule? What are the costs and benefits of referring to the exchange of variation margin to determine if positions should be included in a banking entity’s trading account? Please explain.”

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Media Decoder: F.C.C. Commissioner Leaving to Join Comcast

8:02 p.m. | Updated WASHINGTON — Four months after the Federal Communications Commission approved a hotly contested merger of Comcast and NBC Universal, one of the commissioners who voted for the deal said on Wednesday that she would soon join Comcast’s Washington lobbying office.

Meredith Attwell BakerChip Somodevilla/Getty ImagesMeredith Attwell Baker

Meredith Attwell Baker, a former Commerce Department official who worked on telecommunications issues in George W. Bush’s administration, announced that she would leave the F.C.C. when her term expires at the end of June. At Comcast, she will serve as senior vice president for government affairs for NBC Universal, which Comcast acquired in January.

The announcement drew immediate criticism from some groups that had opposed the Comcast-NBC merger. They said the move was indicative of an ethically questionable revolving door between regulatory agencies and the companies they oversee.

The revolving door between government and the lobbyists who seek to influence public policy and legislation on behalf of companies or other organizations was a target of reform by President Obama even before he took office. During the 2008 campaign, he vowed to “close the revolving door” and “clean up both ends of Pennsylvania Avenue” with “the most sweeping ethics reform in history.”

Though Ms. Baker was appointed to what is considered an independent regulatory agency, she signed the administration’s ethics pledge upon taking office in July 2009. Under the pledge, she will not be allowed to lobby anyone at the F.C.C. for two years after her departure.

In addition, Ms. Baker will not be able to lobby other political appointees at the F.C.C., including other commissioners, for the remainder of the Obama administration, including a second term if the president is re-elected. She faces a lifetime ban on lobbying any executive branch agency, including the F.C.C., on the agreement that Comcast made with the commission as a condition of its approval of the merger with NBC Universal.

Ms. Baker can lobby members of Congress immediately upon beginning her new job.

“I am privileged to have had the opportunity to serve the country at a time of critical transformation in the telecommunications industry,” Ms. Baker said in a statement. “The continued deployment of our broadband infrastructures will meaningfully impact the lives of all Americans. I am happy to have played a small part in the success.”

Ms. Baker, one of two Republicans on the five-member commission, recently criticized the speed of the commission’s review of the Comcast-NBC merger, which took 355 days. The F.C.C. voted 4-1 in January for approval, subject to several conditions.

“The NBC/Comcast merger took too long, in my view,” Ms. Baker said on March 2 in a speech to a communications industry group. Noting that that time was similar to the length of other major merger reviews at the commission, she asked whether those reviews were preventing companies from trying to grow through acquisition.

“My concern is that you might walk away,” she told the communications executives, “and how many other consumer-enhancing and job-creating deals are not getting done today.”

Her route of departure was harshly criticized by Craig Aaron, the president and chief executive of Free Press, a media interest group that had opposed the Comcast-NBC merger. Mr. Aaron called the move “just the latest, though perhaps most blatant, example of a so-called public servant cashing in at a company she is supposed to be regulating.”

“No wonder the public is so nauseated by business as usual in Washington, where the complete capture of government by industry barely raises any eyebrows,” Mr. Aaron said. “The continuously revolving door at the F.C.C. continues to erode any prospects for good public policy.”

Ms. Baker issued statements about her departure through both the F.C.C. and Comcast, but she did not address the revolving door issue in those statements. She did not return a phone call to her F.C.C. office seeking comment.

Other interest groups were less vehement in their objections, in part because they viewed Ms. Baker as likely to have voted to approve the Comcast-NBC merger regardless of where her next job would be.

Most of her colleagues on the commission wished Ms. Baker well in official statements.

“She’s made our decisions smarter and our policies better,” Julius Genachowski, the chairman of the F.C.C., said. “I wish her well in her new role at NBC Universal.”

Only one F.C.C. commissioner, Michael J. Copps, who voted against the Comcast-NBC merger, expressed surprise at her departure.

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