Maybe We Should Call It a Consumer Non-Protection Agency

What else would you call a "consumer protection bureau" when it doesn't seem to be protecting consumers?

It's possible that the Consumer Financial Protection Bureau feels that it needs to pick its fights, but I'd have thought that they would start strong, and make it clear that they mean business, and then offer to negotiate particular issues.

The New York Times' Tara Siegel Bernard reported in today's paper that the agency has "introduced a proposal that would make it easier for credit card issuers to charge fees before borrowers' accounts were officially open."

That's right: Before.

Part of the Credit Card Act, passed in 2009 and in full effect since February 2010, said that, as Bernard reported, "credit card issuers could not charge fees equal to more than 25 percent of the borrower's credit limit in the first year after the account was opened."

The solution? Not, of course, to stay within that limit, but instead to charge "application or processing fees before consumers' accounts were opened."

At that point, the Federal Reserve stepped in and "expanded the rule so that the fee limit would also apply to those upfront charges."

And this is where the Consumer Financial Non-Protection Bureau is stepping in to eliminate that rule.

Let's think about who is most likely to be affected by this. Is it someone with sterling credit who pays his or her bills on time every time? Not hardly. No, it's going to be someone whose credit record has been damaged, for good reason or bad, and likely someone of extremely modest means.

Consumer advocates point out that the battle over the regulatory wording stems from a 2011 lawsuit filed by First Premier Bank of South Dakota, which "began charging a $95 processing fee before the card account was opened, as well as a $75 annual fee. Yet the credit limit on the card was $300."

I wrote yesterday that the risky-lending ghouls are back, and I've written before about the ethically dubious behavior that card issuers are still permitted, despite the "protections" offered by the Credit Card Act. I had hoped that the Consumer Financial Protection Bureau would help plug some of those ethical holes. I guess I was wrong.