Tags: CFPB | agency | lawyers | rich

CNNMoney: Lawyers Getting Rich off New Consumer Bureau

Tuesday, 02 Oct 2012 07:46 AM

By Michael Kling

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Lawyers are getting rich by defending banks, debt collectors, student lenders and other financial players from the Consumer Financial Protection Bureau (CFPB), the new agency charged with protecting consumers, according to CNNMoney.

Take the Ballard Spahr law firm, which has increased its revenue by 50 percent this year because the CFPB.

"Things have exploded since, and we've seen just the tip of the iceberg," Alan Kaplinsky, chair of the firm's consumer financial services group, told CNNMoney.

Editor's Note:
 
Unthinkable Haunts Investors: Evidence for Imminent 90% Stock Market Drop. 

The federal agency overseas mortgage lenders, credit card issuers, banks, credit unions, payday lenders, student loan lenders, and credit reporting agencies. As financial services firms rush to respond to new rules and regulations, law firms are capitalizing on the situation.

The consumer bureau is like a "three-headed monster," Kaplinsky told CNNMoney. It has the power to write new rules, examine the books of financial services firms, as well as penalize firms with enforcement actions. "The CFPB is not cognizant about what kind of burden they might be placing on a company."

The agency is investigating dozens of companies, and requiring some to provide huge amounts of documents.

"Many of these companies are not prepared for what's about to hit them," Kaplinsky told CNNMoney, noting that some have never had ongoing federal supervision before.

The CFPB ordered Capital One had to pay $210 million in fines and consumer refunds after the bureau found that the firm’s third-party call center representatives were pressuring consumers into buying extra products.

In addition, Discover Bank was ordered to refund $200 million to credit card holders and pay a $14 million penalty after the agency alleged it used deceptive telemarketing ploys to trick consumers into buying additional products.

The agency has quickly established itself as aggressive enforcer of regulations, which has taken the financial services industry off guard, according to The Associated Press. In its first 14 months, it has launched dozens of enforcement probes and issues over 100 subpoenas for testimonies and dates.

In response, companies are beefing up their record keeping and setting aside more for lawyers.

"The CFPB is a new animal, and they have to establish their turf and a way of doing business," said Kentucky Attorney General Jack Conway, according to the AP.

"If that breaks from standard practice of other regulators, I don't have a huge problem with it."

Editor's Note: Unthinkable Haunts Investors: Evidence for Imminent 90% Stock Market Drop.

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