Tell Sen. Dodd–Pass the Consumer Financial Protection Agency NOW
- January 21, 2010
- 0 comments
- Posted in Banks & Banking, Consumer Rights
The same banks that abused the public with deceptive credit-card pitches and exploding mortgages are demanding the freedom to do it again. And the Senate—that owned and operated subsidiary of Fat Cat, Inc.—might give it to them. The only—repeat, only—section of the financial reform bill that actually helps consumers is the proposed Consumer Financial Protection Agency. It was passed by the House. But bank lobbyists are leaning on Senate Republicans and conservative Democrats to turn the agency into a kind of quilting circle, with lots of chat and busy work but no authority to act. If the lobbyists win, you lose—again—and to the same people who picked your pocket in the first place.
What would this evil bill do that has gotten the bankers so upset? Well, it would gather into a single agency all the consumer protection laws that now are scattered all over the government and poorly enforced. The agency would enforce them, which would definitely crimp the bankers’ style. To take just one example, the authority to stop predatory subprime mortgage lending currently lies with the Federal Reserve. The Fed did nothing to curb the abuse until the financial world collapsed. Only then did it tell the banks to stop lending to people who couldn’t pay.
What other terrible, awful things might the agency do? Credit card issuers would have to write clearer disclosure forms, making it harder for them to hide abusive terms in the fine print. Banks might have to offer low-cost plain-vanilla mortgages alongside their complicated ones, giving you a better choice. The agency could write rules promoting fairness the marketplace for consumer credit. It could even stop predatory practices (what a concept!).
Obviously, the banks, mortgage brokers, and credit-card issuers couldn’t possibly put up with that. They can afford to print unreadable credit-card “disclosures” but it’s far too “burdensome” (as the bankers would say) to print disclosures in sentances that you and I can understand.
President Obama strongly supports the Consumer Financial Protection Agency, as do most Democrats. Republicans (naturally) oppose. The bill is in the Senate Banking Committee, chaired by Chris Dodd. It’s rumored that he’s willing to neuter consumer protection in return for support from Republicans for other parts of the bill. But rolling over for R’s is futile. They’ll oppose the bill anyway.
The agency would not only protect individuals from the worst predations of lenders. It would protect the economy, too. The terrifying 2008-2009 financial meltdown, which has impoverished so many families, began with misleading and predatory mortgage lending. The bankers got rich taking fees for the loans and then selling and reselling them into the global market, also on misleading terms. When home prices fell and families couldn’t meet the onerous payments, the whole house of cards collapsed.
The Fed says it has learned its lesson—in the future, it will pay more attention to consumer deception. Not likely. The Fed has other work to do and besides, it’s dominated by—guess who?—bankers, of course. By contrast, a separate Consumer Financial Protection Agency would be staffed by people who put consumers first. (That worries the banks, too.)
Can Dodd be stopped from selling out? Now that the Senate is one Democrat short, we, the public, may be the first to be thrown over the side. Reportedly, Obama is pressing Dodd to stand firm. If you care—and you should—you should blanket Dodd and the other Dems on the committee with emails and calls. The ultimate irony would be for the Senate to brush off the victims and let the perps go free.
Tags: banks, consumer financial protection agency, consumer protection
