Senate Democratic leaders should conduct an up or down vote on the creation of an independent Consumer Financial Protection Agency on the Senate floor, the co-directors of the Campaign for America’s Future said Friday.
Robert Borosage and Roger Hickey are responding to reports that Republican Sen. Corker, R-Tenn., and other Republican members of the Senate Banking Committee are refusing to support the watered-down legislation they demanded as a price for their support. Despite this abandonment of bipartisanship by the Republicans, press reports indicate the chairman of the Senate Banking Committee, Sen. Christopher Dodd, D-Conn., may introduce a financial reform bill that does not contain an independent agency devoted to defending consumer interests in the financial marketplace. Instead, under one idea floated in press reports, consumer protection would be housed in a unit of the Federal Reserve and would be subsidiary to the Fed’s traditional sole emphasis on banking institution soundness. This neutered version of the legislation was crafted by Dodd in an effort to win Republican votes, and now that Republicans are refusing to support it, the CAF co-directors are telling Dodd not to proceed with a weakened bill.
“It is both bad policy and bad politics,” said Borosage and Hickey. “These deals would leave the American consumer poorly protected and the risk of another catastrophe unacceptably high. And these important policies are being traded away in the Senate in the name of a bipartisanship that never appears.
“Instead of bargaining away a consumer financial protection agency away in a backroom deal, Dodd and Senate leaders should bring the agency to the floor. Dodd should defend the agency, as he has in the past. Then let each member of the Senate decide whether they will stand with consumers or stand with Wall Street.”
The full statement of Borosage and Hickey follows:
A major cause of the financial collapse was the failure of financial regulators to intervene when lenders began peddling “liar’s loans” and other fraudulent or deceptive mortgage products, and millions of families have been harmed as banks gouged their customers with fees and usurious interest rates while regulators looked the other way. This has to stop, and it will not stop without a dramatic change in how Wall Street is regulated.
Weak consumer protection authority in an agency with a tradition of giving ordinary consumers short shrift will not work. We need an independent consumer financial protection agency that acts as a watchdog on behalf of the millions of people who use credit cards, take out a mortgage or car loan, or get financing for their small business. Legislation that the House has already passed would create such an agency and would bring a long-overdue balance between the wants of Wall Street and the needs of ordinary people.
Poll after poll indicates that a majority of Americans support the creation of a consumer financial protection agency. Yet a minority in the Senate is taking its cues from the same Wall Street lobbyists who pushed for the policies that brought us to the brink of financial ruin. To appease that minority, Senate Banking Committee Chairman Christopher Dodd, D-Conn., has indicated his willingness to scuttle this critical component of financial reform. It is both bad policy and bad politics. These deals would leave the American consumer poorly protected and the risk of another catastrophe unacceptably high. And these important policies are being traded away in the Senate in the name of a bipartisanship that never appears. Instead of bargaining away a consumer financial protection agency away in a backroom deal, Dodd and Senate leaders should bring the agency to the floor. Dodd should defend the agency, as he has in the past. Then let each member of the Senate decide whether they will stand with consumers or stand with Wall Street.