"Buyer be damned" – Another reason we need a CFPA

A recent article in the Huffington Post continued the debate about the need for a Consumer Financial Protection Agency by testing a theory from the libertarian guru and author Ayn Rand, whose economic views influenced former Fed Chairman Alan Greenspan and are still alive in the practices of certain Wall St. bankers.  The article seeks to question her theory that “‘hands-off’ capitalism” alone could result in a “fair and productive economy”.

The answer, as we have seen, is a resounding “No”.

The problem, as Jim Randel explains in this piece, is the complete imbalance of power. As long as the credit card companies and mortgage lenders can change the terms of service at any moment, jack up interest rates, and cut off lines of credit without cause or warning, they maintain the upper hand and consumers don’t stand a chance.

Randel goes on to say how this manifests itself in today’s economy:

“That is why we had many people in mortgage loans they should never have been sold. That is why we have lots of people in credit card debt who should have been treated differently well before a crisis arose. Mortgage lenders — both banks and nonbanks — steamrolled their way to profits, let the buyer be damned. Credit card issuers spent hundreds of millions of dollars on tremendously clever marketing campaigns yet next to nothing on educating consumers about the risks and dangers of credit and debt.”

Consumers deserve a chance to stand up to the financial Goliaths, and more government oversight is necessary before that is practically possible. The creation of a Consumer Financial Protection Agency is the essential next step in this battle: contact your elected officials about this issue today!

(Photo: Muffet)