Tallahassee
— Today, the U.S. House Financial Services Committee approved landmark reform
legislation establishing a proposed Consumer Financial Protection Agency,
despite “often blatantly false attacks from industry opponents.” Although
several exceptions to the agency’s coverage must still be addressed on the
House floor or in the Senate, overall, the CFPA bill as passed creates an
independent agency with broad authority to protect consumers in the financial
marketplace.
“Consumers need protection from unfair financial marketplace
practices, protection that they didn’t get from the regulatory system that
failed and left our economy in ruins,” said Brad Ashwell, Florida PIRG’s
Consumer Advocate. “That’s why we need a strong Consumer Financial Protection
Agency and that’s why the committee rejected the often blatantly false attacks
from industry opponents.”
Ashwell added that the Obama-backed Consumer Financial
Protection Agency, as passed, has authority to write rules for all financial
products and to enforce those rules if violated. Although smaller banks and
credit unions will have primary enforcement by their current regulator, the
CFPA will write all the rules and has authority to step in over those primary
regulators when they fail to do their jobs as well as to enforce them over all
bigger banks and all non-banks.
“It is critical that the CFPA’s provision re-establishing
federal law as a floor not ceiling of protection, allowing states to pass
stronger laws, not be eliminated as the bill moves further through the
legislative process,” Ashwell added. “The full consideration of the
PIRG-opposed Bean (IL) preemption amendment to strip the bill’s provision
restoring federal law as a floor not a ceiling of protection was delayed without
a vote but could still occur on the House floor.”
Florida PIRG also warned that a few special interests did
succeed in adding loopholes to the bill that must still be addressed as the
bill moves forward: “Even though many car dealers make unfair and
discriminatory loans, the Campbell (CA) amendment added to the bill would
exempt them from most coverage and may even allow them to make unregulated
payday and predatory loans,” added Ashwell. “Further, over-priced credit life,
disability and unemployment insurance will continue to be carved out from full
consumer protection under the committee-approved Moore (WI) amendment.” In
addition, an important proposed amendment by Rep. Maxine Waters to ensure that
all private student loans would be regulated by CFPA was narrowly defeated,
Ashwell added.
The Consumer Financial Protection Agency is sponsored by
committee chairman Barney Frank (MA) and others and is supported by President
Obama as a core piece of his financial reform platform. The bill must still be
considered by the House Energy and Commerce Committee and the full House as
well as the Senate Banking Committee and the full Senate.
“Nevertheless, despite massive efforts by the big banks,
Wall Street and the U.S. Chamber of Commerce whose members helped cause the
worst financial calamity since 1929, there is still a good chance for final
passage this year of strong legislation creating a tough consumer agency to
replace the broken regulatory system that failed to protect consumers or
taxpayers,” Ashwell concluded.
# # #
Florida PIRG (on the web at floridapirg.org) is a
statewide, non-partisan, non-profit public interest advocacy group that takes
on powerful interests on behalf of its members. Florida PIRG is a founding
member of Americans For Financial Reform (on the web at
ourfinancialsecurity.org), a 200-group strong coalition of leading consumer,
civil rights, labor, community, retiree and investor organizations that have
come together to spearhead a campaign for real reform in our banking and financial
system.
