Governor Newsom’s budget proposal would use existing reserve fund from past enforcement actions to strengthen oversight
SACRAMENTO, CA – Consumer Reports will call on members of the California Assembly and Senate Budget Committees at hearings today to retain the proposal in Governor Gavin Newsom’s budget to create a more effective financial watchdog for consumers. CR is urging lawmakers to support the proposal given the severe economic crisis triggered by the coronavirus pandemic that has made millions of newly unemployed Californians more vulnerable to unfair financial practices.
Governor Newsom’s proposal does not require lawmakers to appropriate any money from the state’s general fund. Instead, he has proposed using the Department of Business Oversight’s existing reserve fund from past enforcement actions to strengthen its oversight of the financial marketplace. The Assembly and Senate Budget Committees are holding hearings today on the budget, which must be passed by state lawmakers by June 15.
“Now more than ever, Californians need a tough consumer watchdog that can protect them from financial scams and ripoffs,” said Suzanne Martindale, senior policy counsel and western states legislative manager. “This proposal will strengthen California’s ability to take on shady lenders and unscrupulous financial service providers that target consumers with high interest loans and other unfair practices. Given the scope and scale of our current economic crisis – which will only get worse in the coming months – lawmakers must act quickly to ensure that the state has the tools it needs to protect Californians struggling to stay afloat and recover financially.”
Under Newsom’s proposal, the Department of Business Oversight would be restructured and renamed the Department of Financial Protection and Innovation (DFPI). The proposal would extend state oversight to important financial industries not currently subject to state licensing and supervision, such as debt collectors, credit reporting agencies and companies marketing digital finance products. The DFPI would be strengthened with dozens of new staff charged with actively monitoring the marketplace to identify patterns of abuse and to secure relief for consumers who are treated unfairly by financial firms.
Michael McCauley, firstname.lastname@example.org, 415-902-9537