Approaches To Consumer Financial Protection

by David Hirschmann

Today the President will speak about the proposed Consumer Financial Protection Agency; and while the Chamber strongly agrees with the President that consumers need more effective protections, we disagree about the best approach to achieving this goal.

We should certainly strengthen enforcement against illegal and predatory practices by expanding the ability of the six current federal regulators tasked with consumer protection to do the job right; we should develop clear, concise, and uniform national disclosures about the risks that financial products pose; we should expand federal rules to close the gaps in regulation; and we should require all regulators to work together to ensure like products are regulated equally.

However, a massive new federal agency with unprecedented powers over vast segments of the business community will not be good for consumers, for America’s job creators or for the economy. We also disagree that adding a new agency atop a broken regulatory system solves the problem or closes regulatory gaps. And there is no way that consumers would be well served by allowing the states to each create different disclosures, and regulations on top of those created by the proposed new regulator.

We will work with the administration and Congress to protect consumers by strengthening the financial system and advancing our economic recovery, but the CFPA is the wrong approach to solving this problem. It will exacerbate the weaknesses of the current system that clearly failed, restrict access to credit and make it more costly for consumers and businesses.

Comments

[Chris Baker]

Entrepreneur in Memphis is smugly and totally missing the point. There are an awful lot of people out there that have NO option but to get a payday loan. And its not 25% APR, its usually a straight 25%, which is usury by any definition. If the Chamber is defending feeding on the most vulnerable members of our society, then I disagree in the strongest possible terms.

[Entrepeneur in Memphis]

I get the logic and I understand the logic because I'm a consumer an a business owner. Consumers would and should be hindered under the CPFA as it would add yet another layer of bureaucracy who's added value would be questionable at best. Their powers could and would threaten options businesses have to offer their consumers.

The second point to make about all of this is that I've passed the 4th grade and can read therefore I am capable to read the fine print when purchasing a financial product. I am not one of those people too lazy to read the 25% interest rate line item on a payday loan. If you don't want to think or be responsible for your own actions then head to a communist country. They love to do the thinking for you.

[ChamberPost]

Phil - Reverse order.

No.

See the top three items here details of our concerns and suggestions. http://stopthecfpa.com/?page_id=26

No.

Check out the CFPA 101 and Failed Model videos here: http://www.youtube.com/user/USCC#grid/user/A828CFA16F5B52D9

BP

[Michael Pierce]

Your stance on this issue is dead wrong! You will not stop or water down this bill, as the consumer has had enough of your spin and blatant lies.

[Phil Blackwood]

I don't get your logic. Why do care which agencies are responsible for dealing with consumer protection issues? Is it just that you want to be sure you can use a "divide and conquer" strategy to thwart effective regulation? Wouldn't it be more constructive for you to clarify areas where you think consumers would benefit from better regulation? Otherwise, you leave the impression that you think fair treatment of consumers is not compatible with a good business climate; is THAT what you think?