Where does the fine go? Does it get divvied up amongst the people affected by WF's wrongdoing?
Money in that fund can be used for only two purposes by law:
1) Compensating victims of the wrongdoing 2) General consumer education & financial literacy programs
The key here is that #1 takes priority by law; #2 only kicks in if the victims are unknown or in a few other edge cases that would make compensation difficult. Victim compensation must always come first. If that drains the fund, #2 never happens[2].
I agree with the others in this thread who have serious problems with regulatory agencies that "self-fund" by using fines to keep the lights on. CFPB doesn't do this -- it cannot do this, even if it wanted to -- and that's what makes it different.
You might remember the debate in Congress over this bill. I was younger then, but still distinctly remember opponents of DF calling for precisely this kind of model during hearings. They were against CFPB receiving operations funding, and frankly I'm glad they didn't prevail. Nobody's issuing excess fines just to keep their jobs for the next fiscal year or levying themselves raises, and consumers get their money back in full. It just seems so reasonable, doesn't it?
[1] https://www.consumerfinance.gov/about-us/payments-harmed-con...
So one of the agencies most likely to go after major corporations don't do this. But the police that go after the little people can? Seems... rigged.
And this is why I don't understand the opponents who want to tear it down. I understand why some might disagree with the bureau for philosophical reasons, but if we're going to have it, let's do it right.
"Goldman Sachs buys a home loan at 50 percent off. It then modifies the mortgage for the borrower to perhaps 60 percent of face value. The modification gets referred to the overseer of the mortgage settlement, proving that Goldman did lower the cost for the homeowner. And as homeowners begin to make modified payments, the bank can resell the now-performing loans, or just take in the revenue stream. If this works, Goldman makes at least a 10 percent profit on the deal, while satisfying the consumer relief terms of the settlement."[1]
The above glosses over the notion of it working by saying "if it works," but for the most part, it does.
[1] https://finance.yahoo.com/news/goldman-sachs-wins-lose-mortg...
Good reference, too:
https://www.nytimes.com/2017/03/17/business/dealbook/mortgag...
By law, those are the only things the CFPD can spend this money on.
Civil Penalty Fund Rule: https://www.consumerfinance.gov/about-us/payments-harmed-con...
Are you crazy? The fines usually get distributed around different politicians to spend on their favorite things. Like this https://www.usatoday.com/story/opinion/editorials/2014/07/14...
Which is why these fines will continue. Everyone hates the banks so the regulators can just keep fining them for everything indefinitely, when they run out of ideas they find some new problems with the 2008 mortgages again.
This pattern can be seen everywhere...
1) politicians regulate an industry with the best intentions
2) industry becomes a safe haven for "the big fish" that can pay to play
3) Rinse and repeat for a while, creating bigger and bigger barriers to entry into the marketplace. Politicians are happy, mega banks are happy.
4) Megabank inevitably does something reprehensible
5) politicians slap them with some fines. Fake remorse ensues...
6) go back to step 1
Oh, you meant to say that you want to be able to object to taxation but still freeload on all the benefits. Sorry, no.
Apparently a lot of bitcoin people are considering the move. Move there for a year, sell your bitcoin, move back or something like that?
The only thing I would correct in your "Financial Corruption Process Map" is the step after #3:
.
3.5 "big fish" start buying up politicians and lobbying firms to legalize more and more "bad behavior"
4. Megabank acts legally to do something "reprehensible" since they lobbied to legalize it.
4.5 financial collapse. scandal...then the hand wringing begins by walking corpses in Washington.Long story short, this all going into the Civil Penalty Fund:
In accordance with the Dodd-Frank Act and the Bureau's Civil Penalty Fund rule, the Fund can only be used for two purposes: to compensate eligible harmed consumers and, to the extent that victim payments are not practicable, to provide funding for consumer education and financial literacy programs.
https://www.consumerfinance.gov/about-us/payments-harmed-con...
The GAO has audited the CFPD, and verified the funds are being spent in accordance with the law.
Those who designed the agency were worried about precisely this kind of perverse incentive structure & required that it distribute all penalties back to consumers.
https://www.consumerfinance.gov/about-us/payments-harmed-con...