June 30, 2009

New Consumer Agency Will Keep Wall Street in Check

Statement of David Arkush, Director, Public Citizen’s Congress Watch Division

For too long, financial regulators have been too cozy with the financial services industry that they were supposed to be overseeing. Moreover, not a single federal agency focuses primarily on consumer protection for credit products. Lenders have run amok, writing their own rules and creating a maze of unfair and predatory products that have harmed consumers and destabilized the economy. The lack of oversight and regulation, along with Wall Street’s unchecked greed, drove this country into its current financial crisis. Americans deserve an agency that will put their financial well-being ahead of the short-term profits of a few Wall Street banks.

The president’s proposal to create a new Consumer Financial Protection Agency (CPFA) will add much needed oversight of an industry that has run wild at great expense to consumers and homeowners.

While the proposed agency is welcome news, we must ensure that it is strong and effective. Congress must give it the resources it needs to be successful and must ensure that it is independent of the industry it will regulate.

Finally, although the president’s proposal is strong, there are key areas in which it should be improved. If the president and Congress are serious about ensuring that the new laws are enforced, they should give consumers the ability to enforce their own rights in court - not depend on government regulators to protect them. We look forward to working with Congress and the administration to ensure passage of the strongest possible consumer protection agency.

###