March 2010

Consumer Protection in America: Go Big or Go Home

Christina Latta Henry |  | Uncategorized

In case you haven’t heard, the House of Representatives passed a bill in December 2009 calling for the creation of a Consumer Financial Protection Agency, an independent federal agency solely devoted to protecting Americans from unfair and abusive financial products and services.  Now the Senate is kicking around proposals of their own, as discussed in this Huffington Post article. 

In the article,  Elizabeth Warren (a leading consumer advocate and Harvard Law professor) argues that a toothless consumer protection agency would be worse than none at all.  To be effective, says Warren, the new CFPA must include 4 key elements:

  • A chief appointed by the president, confirmed by the Senate;  
  • Independent budget authority, so it won’t be subject to the whims of Congress or an anti-consumer administration; 
  • Independent rule-making authority, without interference by bank regulators or others who may focus on bank profitability before focusing on consumers;
  • And independent enforcement powers, so the agency’s investigators can go after abusive lenders.

    • Warren isn’t the only one who understands the necessity of a strong, independent consumer protection agency.  In a recent column, economist and NY Times writer Paul Krugman opined that an important factor in the stability of Canada’s economy, as opposed to our volatile one, is the existence of an independent Financial Consumer Agency.

    For the sake of America’s future, let’s hope the Senate takes their responsibility seriously and does not create, as Warren put it, “some mouthful of mush that doesn’t get the job done.”