(NNPA)—Less than a year ago, the President signed into law the bipartisan Dodd-Frank Wall Street Reform and Consumer Protection Act. The Consumer Financial Protection Bureau, a cornerstone of this historic law, was created to streamline financial consumer protection regulations and prevent financial crises like the Great Recession from recurring. CFPB is a single new agency whose sole purpose is to protect consumers from the types of abusive, unfair lending practices that sparked the current financial crisis.
Now, as the new agency prepares to begin operating this July, some on Capitol Hill are working to undermine it. The House and Senate are considering a variety of bills that together would fundamentally weaken the integrity and independence of the CFPB. These bills would do the following:
Allow bank regulators the ability to veto the legislation, if banks complain about cutting into fees and other revenue sources. These are the same offices that failed to provide the consumer protections in the past and could have averted the mortgage crisis;
Remove the agency’s independent funding potentially giving big bank lobbyists the ability to hamstring the CFPB through the annual Congressional appropriations process;
Replace the single, accountable director as the head of the agency with a weaker five-person commission—where no one individual would be responsible for the agency’s decisions; and
Delay implementation of the Bureau when the nation has waited long enough already!
In response, the Center for Responsible Lending and other consumer advocates and allies are urging Congress to reject the new proposals. Recently, more than 65 national and state organizations together advised Congress that the bills, “ignore the lessons that have been learned about the regulatory failures that triggered a housing and economic crisis and caused extraordinary pain for millions of Americans.”
It would be wise for Capitol Hill to heed these pro-consumer voices. Has Congress so soon forgotten the reasons CFPB was created? It was the absence of consumer protections that led to millions of foreclosures and a public bailout of the institutions that operated with ill-advised practices and only short-term profit perspectives. After taxpayer dollars bailed out taxpayer dollars bailed out these lenders, doesn’t the public deserve protection too?
It was not that long ago that the financial services industry dedicated billions of dollars for efforts to deny the nation financial reform—more than any other industry lobbying expenditures during the past decade. That translates into $1.4 million a day and includes 1,726 registered federal lobbyists paid to woo 100 U.S. Senators and 455 Members of Congress, according to the Center for Responsive Politics.
At best, the proposed bills are premature, as the agency will not even come into existence until July 2011. At worst, they are a brazen attempt to preserve privilege and profits for large lenders at the expense of everyday citizens.
For communities of color, the stakes are high in ensuring that reforms remain strong and meaningful. The financial crisis has widened the racial wealth gap and ongoing foreclosures are hitting minority communities the hardest. According to CRL’s research, more than $350 billion in wealth has been lost to African-American and Latino communities.
Consumer protection and bank safety should go hand in hand. Restoring this balanced approach assures us a more safe and sound financial system, and with it a more sustainable economy.
It’s time to allow the CFPB to do its job.
(Charlene Crowell is the Center for Responsible Lending’s communications manager for state policy and outreach. She can be reached at: Charlene.firstname.lastname@example.org.)