Earlier this week another government official resigned. Seth Frotman from the Consumer Financial Protection Bureau, or CFPB, announced he was quitting the agency with a scathing letter that most of us can only dream of writing to our old bosses.
Frotman, who was the student loan ombudsman at CFPB, said in his letter that the White House has “turned its back on young people and their financial futures.” He says the agency sides with lenders, rather than borrowers, and has not protected those who take out loans, from predatory lending practices.
Goldie Blumenstyk, a senior writer for the Chronicle of Higher Education, says the agency, which was created as part of financial-reform efforts during the Obama administration, began focusing on student loans after reports of problems surfaced involving private lenders and credit card companies.
Blumenstyk says CFPB created a complaint database for borrowers who felt they had been treated unfairly.
“They’ve identified places where veterans were being charged fees that they shouldn’t have been charged,” she says. “They’ve identified servicing practices that were improper that banks had been doing, that banks have backed off from doing.”
Based on his resignation letter, Frotman’s departure is a result of what he saw as the agency’s suppression of complaints against lenders, Blumenstyk says. Frotman’s job had been to be the agency’s public face when it came to fielding complaints from borrowers.
Written by Shelly Brisbin.