June 15, 2010
Conference Committee Works to Finalize Reform Legislation
WASHINGTON, D.C. – As members of the House and Senate meet today to work on a final version of financial reform legislation, Consumers Union, the nonprofit publisher of Consumer Reports, called on lawmakers to support the strongest possible bill and oppose attempts to weaken it. The conference committee charged with reconciling the House and Senate versions of the legislation is aiming to finish their work this month.
“The House and Senate bills both contain important reforms that will go a long way toward stopping the reckless financial practices that helped spark our economic crisis,” said Gail Hillebrand, Director of Consumers Union’s Defend Your Dollars campaign (www.DefendYourDollars.org). “We need the best of both bills in the final reform package so consumers are protected from unfair financial practices and to rein in the kind of risky behavior on Wall Street that undermined our economy.”
“Americans have suffered long enough from weak financial regulation and cozy relationships between the big banks and the federal regulators,” said Pamela Banks, Senior Policy Counsel for Consumers Union. “It’s time to stand up for a fair, common-sense financial system that protects consumers.”
Consumers Union urged conference committee members to support the strongest combined versions of the two bills so that it includes key reforms including:
• A fully independent watchdog: The new Consumer Financial Protection Bureau or Agency is critical for a fair financial system because its sole job is to look out for consumers when it comes to emerging schemes and rotten deals. To be truly aggressive and effective, this bureau needs a guaranteed, independent source of funding so it can do its job right. It should not have funding that is subject to industry pressure. And it should have real, independent authority so it cannot be overruled or vetoed by bank regulators.
• No special loopholes: Auto dealers are among those trying to be exempted from the bill so the loans they make aren’t subject to the same rules as other lenders. Some dealers steer customers into high interest-rate loans when consumers actually qualify for lower interest rates, costing Americans an estimated $20 billion annually in overcharges. No industry, lender or financial entity should be exempted from the consumer protections in the legislation. Consumers Union recently placed a full-page newspaper ad in opposition to the auto dealer exemption. The ad is online here: http://www.consumersunion.org/pdf/AutoLending-Ad.pdf
• End speculative bank investing: It is vital to have a strong “Volcker rule” if we’re to stop the risky gambling with our investments. This measure prevents banks from making certain kinds of investments if they’re not on behalf of customers; stops them from investing in hedge funds or private equity funds. Banks should be banks, not casinos. American consumers are the lifeblood of banks, and deserve to know that their deposits and investments will be protected from undue or hidden risk to ensure that taxpayers are never again on the hook for their bailout.
• Protect investors: All investment advisors should have a fiduciary duty to their clients first and foremost. Existing Sarbanes Oxley reporting requirements should be preserved so investment advisors are keeping honest books.
• Regulate and shine light on derivative trading: The reckless investments on Wall Street that ruined our economy were made possible by the hidden and largely unregulated trading of derivatives. It is time to strongly regulate these trades and bring them out into the public eye so we can head off the types of dangerous trading that could collapse our economy again.
• Let states protect their consumers: Consumers want more “cops on the beat” to address new abuses before they spread and garner national attention, and consumer protection legislation must apply equally to federally chartered banks and thrifts and to other types of financial services providers. State Attorneys General must be given the power to engage in law enforcement of both state and federal consumer protections laws and rules.
David Butler or Kristina Edmunson, 202-462-6262
Michael McCauley, 415-902-9537