Today's top reason to support the CFPA: Ending federal preemption of lending laws
Today’s top reason to support the Consumer Financial Protection Agency: it would establish a regulatory “floor” and end federal preemption of state lending laws.
In the current system, federal preemption disables the ability of state governments to protect citizens from predatory lending by national lenders. Instead of following local rules, these lenders are allowed to follow the less-strict national standard. State governments can’t set higher standards, and attorneys general can’t enforce the preempted rules. The CFPA could change all that.
The CFPA would be able to issue strong rules that apply nationwide to all providers and would vigorously enforce these rules, thus restoring a first line of defense to consumers who use these products. By giving states back the power to respond as they see fit, attorneys general would be able to help make sure that companies are following the rules, further cutting down on abusive lending. States would be able to stop abusive products before they create national problems, and can act quickly and precisely to stop specific issues that arise.
If you’d like to know more about ending preemption, we recommend reading this summary put out by our Partner organization, the National Consumer Law Center.
It’s no surprise that the financial industry prefers the status quo. They’d rather continue to operate within the weak and fragmented regulatory structure we have now. But that system benefits banks, and only banks. An overhaul that features a strong and effective Consumer Financial Protection Agency? That benefits the rest of us.