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Strict Consumer Protection or Nothing

You would think that protection of consumers, who lost their homes, businesses and jobs because of the shenanigans of the financial industry, would be a high priority of both Democrats and Republicans in the Senate. Not so. It seems that satisfying bankers and Wall Street, who melted our economy, comes first.

The House passed a decent consumer protection bill. The Senate Banking Committee Chairman, Christopher Dodd, is fiddling around - "talking" to Republicans - while consumers are burned. Though Dodd started with a decent independent protection agency his Republican friends want no such thing. An independent agency would be hard for the financial guys to control. The financial guys want the Fed, which is run by banks for the banks, to be in charge. If not the Fed, then maybe the Treasury Department, which is run by Geitner and other financial allies. The Republicans want to have a consumer protection agency, but not one that has any teeth.

Elizabeth Warren, the federal bailout watchdog, does not care where the agency physically exists as long as it has four simple attributes:

* 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.

The House bill meets these requirements. The way things are going in the Senate, the Senate bill will not. Warren states her opinion about this unequivacally:

My first choice is a strong consumer agency. My second choice is no agency at all and plenty of blood and teeth left on the floor.

No consumer agency is better than having an agency that allows financial predators to get away with horrible scams. Better to vote against phony regulation and point the finger at those favoring it. Proponents of a weak agency should be politically attacked in November.

Only a strong and independent consumer protection agency will do. We must have strict consumer protection or nothing.

Posted by Paul Siegel at March 3, 2010 7:17 PM
Comments
Comment #296654

Out of an average of 251 business days per year I have 50-60 of them with auditors helping us enforce regulation, state regulators, and federal regulators. On those days 1 out of 5 people I pass in the hallway are not my employees.

Congress needs to grow a pair and consolidate regulators, not add regulators. Europe has more regulation on financial institutions, how is their economic recovery going?

Paul, as a 25 year credit union person, I agree with your last statement. But not through another regulator. Through consolidation and focus. Another layer will just make my expenses rise. And impact our credit union’s ability to charge lower loan rates and pay higher dividends and have lower fees/charges.

Posted by: Edge at March 3, 2010 7:58 PM
Comment #296663

Paul

We have an interesting trade off. We hear complaints that nobody will lend to people unless they have really good credit. But that is what we want, right? Didn’t we get in trouble because there was too much lending to people who couldn’t or wouldn’t pay back?

Posted by: Christine at March 3, 2010 9:30 PM
Comment #296747

Chrisitne,

“We have an interesting trade off.”

Are you suggesting that small businesses and the average consumer should trade protection from fraud, misrepresentation and overreaching by banks for credit? That’s, in my book, extortion.

Posted by: Rich at March 4, 2010 8:21 PM
Comment #296802


I think we can be fairly assured that any consumer protection legislation passed by this Congress will be filled with loopholes and it will do nothing to prevent the to big to fail banks from buy the influence they need.

We have a consumer protection agency now and over the last decade it has done a very poor job. More often than not, it has been independent consumer groups that have discovered many of the tainted products that have been coming our way courtesy of globalization and media outlets that have spread the word, forcing the consumer protection agency to react.

Posted by: jlw at March 5, 2010 11:05 AM
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