May 3, 2011
New Consumer Watchdog on Wednesday, May 4
WASHINGTON, D.C. – Consumers Union is urging members of the House to oppose efforts in Congress to weaken the new Consumer Financial Protection Bureau (CFPB). A House Financial Services Subcommittee is scheduled to consider a number of bills on Wednesday, May 4, that would undermine the CFPB’s ability to protect consumers, according to Consumers Union, the non profit publisher of Consumer Reports.
“Congress should reject efforts to turn this new consumer watchdog into a lapdog,” said Pamela Banks, Senior Policy Counsel for Consumers Union. “The Consumer Financial Protection Bureau hasn’t even opened its doors yet and opponents of reform in Congress are already trying to weaken it. Lawmakers should oppose efforts to undercut the CFPB and stand up for consumers who deserve a fair deal on their credit cards, mortgages and bank accounts.”
Several bills have been introduced in Congress that would threaten the CFPB’s ability to effectively respond to financial rip-offs. Chief among them is HR 1121, a bill sponsored by Representative Spencer Bachus (AL) that would hurt the CFPB’s ability to protect consumers by replacing its director with a five-member commission.
“It’s critical for the CFPB to be led by a single director,” said Banks. “We can’t afford to hamstring the CFPB with an unnecessarily complicated bureaucratic structure. Replacing the CFPB’s director with a commission would slow down its decision making process and make it more prone to internal discord.”
For years, consumer advocates warned that subprime and other exotic mortgage lenders were putting homebuyers at risk. It’s now clear that the failure to act quickly and effectively to protect consumers from these lending abuses played a key role in triggering a record number of foreclosures and the country’s deep recession.
HR 1315, sponsored by Representative Sean Duffy (WI), would make it easier for other banking regulators to veto new rules developed by the CFPB. Right now, the Financial Stability Oversight Council (made up of representatives of other banking agencies) can set aside new rules developed by the CFPB with a two-thirds vote. Under the bill, a simple majority vote would nullify new CFPB rules.
“It makes no sense to give the same banking regulators who were asleep at the wheel before the last financial crisis more power to second guess the CFPB,” said Banks. “Current law already provides the needed balance on the CFPB’s authority without undermining its ability to protect consumers.”
Beginning in July 2011, the Consumer Financial Protection Bureau will work to make sure that financial companies provide consumers with the information they need to understand the true costs and risks of different products. It will be charged with identifying and stopping unfair, deceptive, and abusive financial practices and keeping the rules governing financial service products up-to-date.
For more information on Consumers Union’s efforts to support the CFPB, see www.DefendYourDollars.org
David Butler (dbutler@consumer.org) or Kara Kelber (kkelber@consumer.org) 202-462-6262; or Michael McCauley (mccami@consumer.org) 415-431-6747, ext 126