Yesterday, President Obama submitted his proposal to create a new consumer protection agency to Congress—and it’s already stirring up a debate.
First, take a look at some of the functions of the Consumer Financial Protection Agency (CPFA), as outlined by the Associated Press:
- oversee products used by consumers such as mortgages, credit cards, payday loans and terms on savings accounts;
- be in charge of implementing a law passed by Congress this spring that protects consumers from sudden interest rate increases on unpaid credit card balances;
- be required to police the market continuously and publish its findings once a year; and
- consist of a five-member board, with four members nominated by the president and confirmed by the Senate. The fifth member would be the director of the new National Bank Supervisor, a proposed merged agency to create to take over bank regulation duties.
We think the president’s proposal to create a new CFPA will add much needed oversight of an industry that has run wild at great expense to consumers and homeowners. The current 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.
But the bankers don’t seem to agree. According to the Washington Post,
an intense lobbying effort has already begun to win over the few undecided lawmakers who will be critical in deciding which details will be included in the final bill. Industry groups say they are forming a coalition to persuade members of Congress to scale back the bill.
What’s their concern? Money, of course. U.S. News and World Report says it’s possible that the CFPA “would be funded through assessments on banking firms themselves—similar to the way the Federal Deposit Insurance Corp’s insurance fund is paid for—[and the banks] aren’t going to be happy about anything that involves coughing up extra cash.”
This agency will not work if its powers are diluted and the banks get what they want. The whole point of financial reform and oversight is to change the status quo for the better, so that consumers are protected from risky practices by lenders.
Further, if the president and Congress are serious about ensuring that 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. Want to take action? Sign our petition demanding transparency, oversight, and accountability in the financial industry. With your support, we’ll keep working with Congress and the administration to ensure passage of the strongest possible consumer protection agency.