FOR IMMEDIATE RELEASE
Monday, March 1, 2009
CONTACT:
Rebecca Alper
NJPIRG Program Associate
Office: 609-394-8155 x313
Mobile: 617-840-5999
Email: ralper@njpirg.org
Consumer Group Says Leaked Draft Compromise Proposals
from Sens. Dodd and Shelby
on the Consumer Financial Protection Agency (CFPA)
“Won’t Do the Job And Will Let Reckless Big Banks Win”
Trenton, March 1 – NJPIRG today said that several leaked draft proposals to make the proposed Consumer Financial Protection Agency (CFPA) subservient to other bank regulators that would have veto power over its decisions “won’t do the job and will let reckless Wall Street banks win over consumers living on Main Street.”
“While we appreciate Chairman Dodd’s and Senator Shelby’s extensive efforts to secure bipartisan support for this critical part of the financial reform bill, effective reform is once again being blocked by opposition from the big banks that caused the current financial crisis, said NJPIRG’s Rebecca Alper. “The proposals do not provide what is needed to protect American families or the financial system as a whole: a strong, independent Consumer Financial Protection Agency with the power to set and enforce fair rules for all types of credit.”
Over the weekend, negotiating offers between Chairman Chris Dodd (D-CT) and ranking Republican Richard Shelby (R-AL) were leaked to the press. The Dodd proposal would place the CFPA inside the Treasury Department, give other bank regulators a veto over its decisions and would not grant the CFPA broad authority to regulate non-banks, including payday lenders. One Shelby proposal is similar in structure, except it would place the CFPA inside the FDIC and subject to a veto of its actions by the FDIC’s board, which includes bank regulators not sympathetic to consumer protection. The other Shelby proposal would create a council of existing regulators with greater consumer protection authority.
“None of these proposals, although offered in good faith, guarantees that the CFPA would be independent of obtrusive industry or indifferent other regulator influence,” added Alper. “Big banks and abusive lenders fought responsible regulation before the crisis, and we are all paying the price. It is unacceptable for Congress to allow them to succeed again by compromising in this manner.”
Consumer protection responsibility for financial products has been scattered across seven different agencies, and is a low priority for them. To remedy this problem the Administration proposed creating a new independent consumer regulator that would consolidate and streamline this authority, and focus on establishing and enforcing fair rules for banks and other lenders when they deal with American families. The agency they proposed would be independent, with authority and enforcement over all lenders. The proposal was weakened in the House, due to industry opposition, but the final House bill still created a new, consolidated and independent protector for consumers and is a major improvement over what we have today. The recent revised proposals would establish much weaker consumer regulation that would not have the autonomy or the authority it needs to effectively protect consumers from abusive financial practices.
“The public wants Wall Street reform with more consumer protection, not less,” Alper concluded, “Instead of listening to the Wall Street financial arsonists who wrecked the economy, Congress should listen to their victims on Main Street whose houses burned down, whose 401-k's read like Stephen King novels and who've lost their jobs.”
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NJPIRG is a state-wide, nonprofit consumer advocacy organization. For more information, visit, www.njpirg.org.
